Commonwealth Bank shares were down sharply yesterday following the bank's decision to demerge its wealth management and mortgage broking divisions.
CBA was trading at $72.05 shortly before close yesterday afternoon, down 2.65 per cent for the day after the bank announced the demerger of its wealth and broking businesses under a new CFS Group banner.
CBA led the declines on the ASX200 yesterday, which was down 0.3 per cent overall. NAB was down less than 1 per cent, while Westpac shares declined by 0.37 per cent and ANZ were up slightly for the day.
Subject to approval from the CBA board, shareholders and regulators CFS Group will be demerged next year.
The new entity will include Colonial First State, CFSGAM, Count Financial, Financial Wisdom and Aussie Home Loans.
The announcement confirms that the entirety of CBA's wealth management business (with the exception of the salaried advice business Commonwealth Financial Planning) will be demerged.
The demerged CFS Group will also include CBA's minority shareholdings in Countplus and Mortgage Choice.
The chairman of CFS Group will be former Suncorp chief executive John Mulcahy, who was announced as the chairman of CFSGAM on 19 April after the bank announced an IPO of CFSGAM that will no longer push through.
CFS Group is currently undergoing a search for a chief executive.
Following the demerger, CBA will undertake a "strategic review" of its general business, including a potential sale.
The implementation of the demerger is subject to final CBA board, shareholder and regulatory approvals under a scheme of arrangement.
Commenting on the demerger of CFS Group, CBA chief executive Matt Comyn said: "The wealth management and mortgage broking businesses are each high-quality franchises."
"With innovation and disruption in wealth management increasingly favouring specialist companies, they will benefit from independence and the capacity to focus on new growth options without the constraints of being part of a large banking group," Mr Comyn said.
Mr Comyn also announced a series of executive appointments yesterday, including the promotion of chief risk officer David Cohen to deputy chief executive.
As part of his new role, Mr Cohen will be responsible for overseeing the demerger of CFS Group from CBA.
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