June 27, 2018 / 4:58 AM / 5 months ago

FACTBOX-Powerful Australian inquiry spurs asset sales by top banks

SYDNEY, June 27 (Reuters) - After decades building financial conglomerates around one of the world’s largest retirement savings pools, Australia’s biggest four banks are offloading billions of dollars in non-core businesses to focus on bread-and-butter lending.

The exits have been triggered by regulatory pressure to shore up capital coffers. They also preempt structural reforms likely to be ushered in by an inquiry that has led to damaging revelations of misconduct in Australia’s finance sector.

The top banks’ wealth management and insurance arms currently serve Australia’s A$4.3 trillion ($3.17 trillion) retirement savings industry, the world’s fourth-biggest such pool of funds, according to investment advisers firm Willis Towers Watson.

Below is a list of the banks’ recent exits:

Commonwealth Bank of Australia

* June 2018: Australia’s largest bank by market value says it will demerge its wealth management, mortgage broking and funds management unit in 2019 into a new company called CFS Group. Macquarie analysts value CFS at A$6.5-A$10 billion.

* March 2018: CBA says it may sell its majority stake in Indonesian insurer PT Commonwealth Life, valued by sources at up to $250 million.

* September 2017: CBA agrees to sell its life insurance businesses in Australia and New Zealand to AIA Group for A$3.8 billion. That was after the Sydney-based bank admitted and apologised for using outdated medical definitions to avoid paying life insurance claims.

Westpac Banking Corp

* November 2017: Australia’s No.2 lender says it will sell its funds management arm, Hastings, to a British asset manager for an undisclosed sum. Hastings managed about $10 billion.

* May 2017: Westpac announces plans to exit its investment in funds manager BT Investment Management as its stake, valued at up to A$645 million, was no longer viewed as a core asset.

The Sydney-based bank is defending two lawsuits by the corporate watchdog, one over allegedly lending irresponsibly and the second over alleged responsibility for a financial planner that gave poor advice for years.

Australia and New Zealand Banking Group

* May 2018: ANZ agrees to sell its New Zealand life insurance business to U.S.-listed Cigna Corp for NZ$700 million ($477.40 million).

* December 2017: ANZ agrees to sell its life insurance arm to Zurich Insurance for A$2.85 billion.

* October 2017: ANZ announces it has agreed to sell its pension unit to wealth manager IOOF Holdings for A$975 million ($720.33 million).

Over the last two years, the Melbourne-based bank has sold over 17 businesses, unwinding a strategy set by its previous CEO to expand its Asian presence.

National Australia Bank * May 2018: Australia’s No.4 lender says it was looking to exit part of its wealth management unit by 2019, likely via a demerger, with some analysts valuing the unit at A$3-A$4 billion.

* October 2015: Sells 80 percent of its life insurance arm to Japan’s Nippon Life Insurance for A$2.4 billion.

Macquarie Group

* March 2016: Australia’s so called “Fifth pillar”, a reference to Macquarie’s size behind the four major commercial banks, sold its scandal-hit life insurance business to Zurich Insurance for an undisclosed sum.

In mid-2015, Macquarie had to refund millions of dollars to about 2,300 clients who were charged more fees than promised, but the bank has so far been unscathed by the Royal Commission. ($1 = 1.3570 Australian dollars) ($1 = 1.4663 New Zealand dollars)

Reporting by Paulina Duran and Byron Kaye; Editing by Himani Sarkar

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