egolinews.com

Commonwealth Bank of Australia (CBA) announced it has entered into an agreement with Bank of Queensland Limited (BOQ) to sell the St Andrew’s insurance business, consisting of St Andrew’s Insurance (Australia) Pty Ltd and St Andrew’s Life Insurance Pty Ltd. The company said the sale does not cover St Andrew’s investments, superannuation, retirement income and financial planning businesses which are being integrated into the Commonwealth Bank’s Wealth Management business.

The agreement is expected to be complete around July 2010 subject to sale conditions.

CBA acquired the St Andrew’s insurance business as part of its acquisition of Bankwest in December 2008, and was being integrated into its insurance arm, CommInsure.

BOQ said through the purchase it would acquire the consumer credit insurance and life insurance products which St Andrew’s distributes through a base of financial institutions and other providers.

BOQ managing director, David Liddy said the acquisition fits within the BOQ growth strategy, including income diversification through businesses with complementary products to its core mortgage distribution.

“BOQ is already a significant customer of St Andrew’s and has a deep understanding of its business model,” Mr Liddy said.

The company intends to operate the business as a stand-alone entity and maintain the St Andrew’s Insurance Perth-based headquarters.

“The acquisition supports the Bank’s objective of improving our position relative to the majors in terms of interest to non-interest income split,” Mr Liddy said.

He added that the acquisition expected to have a positive impact on BOQ’s return on equity from FY11.

“This is a true bolt-on acquisition, in keeping with our strategy, and the capital requirements are within our existing footprint,” Mr Liddy said.

”The capital impact is less than half a year of organic growth impact.”

BOQ expects the purchase to be immediately earnings per share accretive, based on current trading performance, however added that there would be no material impact on EPS in FY10.

Commonwealth Bank group executive, Wealth Management, Grahame Petersen, said the company had been approached by BOQ.

“St Andrew’s insurance largely replicates an existing insurance capability within CommInsure, and the sale avoids the complexities and costs of integrating the two insurance businesses,” Mr Petersen said.

As part of the deal, Bankwest will maintain its existing relationship with St Andrew’s through an exclusive long-term distribution agreement.

As at 1347 AEDT, Bank of Queensland shares were down 12c to $11.63, while CBA shares were down 36c to $56.84.

Filed under:
Banks and Financials, News and Views by egoli

Commonwealth Bank of Australia (CBA) announced it has entered into an agreement with Bank of Queensland Limited (BOQ) to sell the St Andrew’s insurance business, consisting of St Andrew’s Insurance (Australia) Pty Ltd and St Andrew’s Life Insurance Pty Ltd. The company said the sale does not cover St Andrew’s investments, superannuation, retirement income and financial planning businesses which are being integrated into the Commonwealth Bank’s Wealth Management business.

The agreement is expected to be complete around July 2010 subject to sale conditions.

CBA acquired the St Andrew’s insurance business as part of its acquisition of Bankwest in December 2008, and was being integrated into its insurance arm, CommInsure.

BOQ said through the purchase it would acquire the consumer credit insurance and life insurance products which St Andrew’s distributes through a base of financial institutions and other providers.

BOQ managing director, David Liddy said the acquisition fits within the BOQ growth strategy, including income diversification through businesses with complementary products to its core mortgage distribution.

“BOQ is already a significant customer of St Andrew’s and has a deep understanding of its business model,” Mr Liddy said.

The company intends to operate the business as a stand-alone entity and maintain the St Andrew’s Insurance Perth-based headquarters.

“The acquisition supports the Bank’s objective of improving our position relative to the majors in terms of interest to non-interest income split,” Mr Liddy said.

He added that the acquisition expected to have a positive impact on BOQ’s return on equity from FY11.

“This is a true bolt-on acquisition, in keeping with our strategy, and the capital requirements are within our existing footprint,” Mr Liddy said.

”The capital impact is less than half a year of organic growth impact.”

BOQ expects the purchase to be immediately earnings per share accretive, based on current trading performance, however added that there would be no material impact on EPS in FY10.

Commonwealth Bank group executive, Wealth Management, Grahame Petersen, said the company had been approached by BOQ.

“St Andrew’s insurance largely replicates an existing insurance capability within CommInsure, and the sale avoids the complexities and costs of integrating the two insurance businesses,” Mr Petersen said.

As part of the deal, Bankwest will maintain its existing relationship with St Andrew’s through an exclusive long-term distribution agreement.

As at 1347 AEDT, Bank of Queensland shares were down 12c to $11.63, while CBA shares were down 36c to $56.84.

Filed under:
Banks and Financials, News and Views by egoli