It is understood the Commonwealth Bank of Australia’s (CBA) planned wealth management spin-off announced last week would not include similar assets housed under its ASB Bank NZ subsidiary.
In a statement last week, CBA outlined plans to “demerge” its diverse wealth management and mortgage broking entities into a separate CFS Group. The bank also plans to review its general insurance business.
“CBA will benefit from an enhanced focus on its core banking businesses in Australia and New Zealand,” the statement says.
However, the CBA release names only Australian assets to be re-homed under the CFS Group roof including: Colonial First State, which administers about A$135 billion of superannuation, investment and retirement funds; the A$207 billion CFSGAM funds management arm; non-bank brand advice groups Count and Financial Wisdom; mortgage-broking firm Aussie Home Loans; and shareholdings in the ASX-listed CountPlus and Mortgage Choice.
ASB manages more than $10 billion of retail investment funds including over $8.5 billion in the group’s KiwiSaver product – the country’s single largest scheme. As well, ASB owns the Aegis investment platform, which administers over $10 billion for institutions and financial advisory firms.
CBA sold off its life insurance unit to AIA last September while announcing plans to review CFSGAM with an IPO touted as one option. The latest CFS demerger plan goes much further than simply listing CFSGAM and follows harsh criticism of CBA’s third-party financial advice and investment platform performance at the recent Australian Royal Commission (RC) into financial services.
The RC slated CBA for, among other items, charging financial advice clients fees for no service and poor administration – with most of the problems linked to the bank’s third-party advisory brands, Count and Financial Wisdom.
Under the CBA plan revealed last Monday, the bank would keep its home-brand salaried financial advisory force in the retail banking services division.
Matt Comyn, CBA chief, said in the release last week: “Today’s announcement is another step in our stated priority to become a simpler, better bank and has followed a thorough review of the Group’s businesses and it’s optimal organisational structure to drive growth and shareholder value for all businesses.
“It also responds to continuing shifts in the external environment and community expectations, and addresses the concerns regarding banks owning wealth management businesses.”
But for now those concerns appear to be limited to the Australian side of CBA’s ledger with no official word yet on the fate of the ASB wealth management assets.
Local regulators have put the heat on NZ banks to prove the parental issues identified in the RC are not present this side of the Tasman.
CBA did not respond to Investment News NZ queries before publication time.