Is Commonwealth Bank of Australia (ASX: CBA) about to sell its CommSec Advisory business?
Commonwealth Bank of Australia or CBA is Australia’s largest bank, with commanding market share of the mortgages (24%), credit cards (27%) and personal lending markets. It has 16.1 million customers, 14.1 million are in Australia. It is entrenched in the Australian payments ecosystem and financial marketplace.
Will Commonwealth Bank Sell CommSec Advisory?
According to the Australian Financial Review’s Street Talk, Australia’s biggest bank is considering selling CommSec Advisory. Commonwealth Bank is looking to sell the business to one of Australia’s leading financial wealth businesses including Ord Minnett, Shaw and Partners and Morgan Stanley Wealth Management.
Following the Royal Commission, these three groups are three of the biggest employers of financial advisers in Australia.
The sad thing for the CommSec staff involved is that they don’t know about the news. There’s going to be a meeting to tell them in about 23 hours from now.
Why Is Commonwealth Bank Doing This?
The bank seems keen to exit its wealth and financial advice businesses. It recently sold its Count Financial business to Countplus Ltd (ASX: CUP).
It’s also selling other assets like Colonial First State Global Asset Management (CFSGAM) for $4.13 billion to Japanese business MUTB.
Commbank is also facing tougher regulation and needs to hold more ‘safe’ capital in reserve. For example, the Reserve Bank of New Zealand (RBNZ) is requiring it to up its capital levels.
The asset sales could be a good way to reach the required Common Equity Tier 1 (CET1) ratio before the capital deadlines kick in.
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