Commonwealth Bank is suspending the demerger of its mortgage broking and wealth management businesses to focus on customer remediation and implementing the recommendations of the royal commission.
The bank had announced the spin-off last year but on Thursday said it would prioritise the implementation of Commissioner Kenneth Hayne’s recommendations before eventually resuming the demerger at an unspecified later date.
‘CBA is prioritising the implementation of these recommendations, refunding customers and remediating past issues,’ CBA said in a statement.
‘CBA remains committed to its strategy to become a simpler, better bank, including ultimately the exit of its wealth management and mortgage broking businesses.’
It is the latest change of plans by CBA, which last year cancelled the previously announced IPO of its Colonial First State Global Asset Management business to bundle it with Colonial First State, Count Financial and Financial Wisdom – plus Aussie Home Loans – as CFS Group for demerger and a separate listing.
But in October, CBA then announced it would sell Colonial First State Global Asset Management to Japan’s Mitsubishi UFJ Trust and Banking Corporation for $4.13 billion, while continuing the demerger of the remaining assets.
The lender on Thursday said it had already spent or set aside $1.46 billion to tackle issues, $1.215 billion of which is related to a wealth management unit that charged fees for no advice and mis-sold insurance.
CBA said it had paid out or provisioned $610 million for customer refunds, with $650 million going on program costs and system improvements, and $200 million on an indemnity provision for wealth management-related remediation issues and costs.
‘We are working to complete this work quickly and accurately,’ CBA said.
CBA shares were down 0.49 per cent to $72.69 at 1320 AEDT on Thursday.