News Life and Health15 Jan 2018

Indonesia:Aussie bank mulls selling stake in insurance unit

15 Jan 2018

Commonwealth Bank of Australia (CBA) will consider selling its majority stake in an Indonesian insurance venture, with any deal likely valuing the insurer at up to US$250 million, reported Reuters citing people familiar with the matter.

Australia's biggest lender is in talks with some investment banks and is expected to hire a financial adviser soon to help it decide on its 80% stake in PT Commonwealth Life, the people said.

The review of the stake forms part of CBA's move to exit non-core areas and a sale could value Commonwealth Life at about US$200 million to US$250 million, two of the people said.

There is no certainty, though, that CBA would proceed with the stake sale plan even after the review is completed, the people said. It was not immediately clear if there was a timeline for the review to be completed.

The stake sale, if completed, will be another instance of Asian banks exiting the insurance sector to free up capital and focus on their core banking businesses amid tougher regulatory capital buffer requirements.

Malaysia's AMMB Holdings (AmBank) is weighing a sale of its general insurance business as part of a move to exit non-core businesses and focus on its main banking operations, Reuters reported in December.

CBA itself in September agreed to sell insurance businesses in Australia and New Zealand to AIA Group for US$3.1 billion, as Australian lenders struggle to cope with growing competition from large foreign firms in insurance.

Asked for comment, a spokeswoman for CBA in Sydney told Reuters that it was business as usual and the bank would not comment on rumour or speculation.

Commonwealth Life has a presence in 20 Indonesian cities with more than 5,000 sales staff and over 500,000 individuals and group customers, its website showed. Its premium income rose 4% in 2016 to IDR1.9 trillion (US$141 million).

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