May 23, 2018 / 12:29 AM / in 3 months

Australia's CBA exits China insurer with $503 million stake sale to Mitsui

(Reuters) - Commonwealth Bank of Australia (CBA) (CBA.AX) is selling its 37.5 percent stake in a Chinese life insurer to Japan’s Mitsui Sumitomo Insurance Co for 3.2 billion yuan ($502.67 million), in a bid to simplify its portfolio and focus on its core banking business.

CBA said on Wednesday it will record an after-tax gain of about A$450 million ($341.01 million) on the sale of the stake in BoComm Life Insurance, which it jointly owns with China’s Bank of Communications Co Ltd (601328.SS).

Mitsui Sumitomo is a unit of Japan’s MS&AD Insurance Group Holdings Inc (8725.T).

CBA said the completion of the sale will satisfy a condition to the sale of its life insurance businesses in Australia and New Zealand to Hong Kong’s AIA Group (1299.HK) announced in September last year.

The deal follows a similar trend among major Australian banks to trim their capital requirements, with peer Australia and New Zealand Banking Group (ANZ.AX) exiting a Cambodian joint venture earlier this month.

CBA, Australia’s largest bank by market value, also said it is contributing about 1.13 billion yuan to a capital raising by BoComm Life Insurance, which would be conducted before the transaction completed.

The bank said it expects its common equity tier 1 ratio to increase by 13 basis points following the conclusion of the transaction, which is subject to regulatory clearance in China.

($1 = 1.3196 Australian dollars)

($1 = 6.3660 Chinese yuan renminbi)

Reporting by Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta and Muralikumar Anantharaman

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