Commonwealth Bank has offloaded its stake in a Chinese life insurance joint venture for $668 million.
CBA sold its 37.5% equity interest in BoComm Life Insurance to Japanese insurer Mitsui Sumitomo as per a condition of the bank's sale of its Australian and New Zealand life insurance businesses to AIA Group announced in September 2017.
The bank anticipates the transaction will result in an indicative after tax gain of about $450 million. The carrying value of CBA's interest in BoComm Life was about $150 million.
Commenting on the sale, CBA chief executive 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, and the strategic review of the group's life insurance business in Indonesia."
BoComm Life is intending to undertake a capital increase ahead of finalising the sale, with CBA making a pro rata contribution of $235 million, which will be separately reimbursed in full by Mitsui Sumitomo once the transaction is completed.
CBA said it expects the impact to its Common Equity Tier 1 ratio to be a net increase of 13 basis points, comprising an initial five basis point reduction at the time of the capital contribution. This will increase by 18 basis points upon completion.
The sale is subject to approval by the China Banking and Insurance Regulatory Commission, Chinese merger clearance and completion of the capital increase.
The completion of the sale of CBA's life insurance businesses to AIA is also still subject to regulatory approvals.
CBA is also currently undertaking a strategic review of its Indonesian life business, PT Commonwealth Life. The bank currently owns an 80% stake in the firm.