Commonwealth Bank of Australia (CBA) has announced it plans to suspend the upcoming demerger of its wealth management and mortgage broking businesses.
The given reason is being able to focus more wholly on implementing the royal commission’s recommendations.
Despite the change in plans the statement assured that “CBA remains committed to its strategy to become a simpler, better bank, including ultimately the exit of its wealth management and mortgage broking businesses.”
The demerged business, CFS Group, was to include CBA’s Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.
In June 2018, CBA CEO 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.
"It also responds to continuing shifts in the external environment and community expectations, and addresses the concerns regarding banks owning wealth management businesses.”
The demerger was expected to be complete in late 2019.
Former SocietyOne CEO Jason Yetton had been appointed CEO and Andrew Morgan was set to be CFO of the new entity made up of CBA’s wealth management and mortgage broking businesses, which was termed 'NewCo'.
In its most recent financial results, CBA reiterated that $1,460m has been spent or provisioned to address issues over recent years, including $1,215m in relation to its wealth management businesses including $610m refunded for customers affected by fees for no service issues.