Commonwealth Bank of Australia (ASX: CBA) announced today that it is selling its 37.5% equity interest in BoComm Life Insurance to Mitsui Sumitomo Insurance for RMB 3.2 billion ($668 million).

According to Commonwealth Bank, BoComm Life had an accounting value of $150 million at 31 December 2017, so it will make a gain on the sale of around $450 million.

Before the completion of the sale, BoComm Life intends to undertake a capital increase and Commonwealth Bank will need to contribute $235 million. However, this will be reimbursed by Mitsui Sumitomo Insurance after the sale goes through.

Commonwealth Bank has calculated that this will increase its Common Equity Tier 1 (CET1) ratio, which is how much capital the bank is holding to remain safe, by 0.13%.

CEO Matt Comyn said: “This transaction represents a further step in simplifying and focusing our portfolio and follows the announcement of the proposed sale of the Group’s life insurance businesses in Australia and New Zealand to AIA Group.”

The Commonwealth Bank share price has fallen 0.38% so far today, according to Google Finance. 

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