Australian banks shed $13b in assets in downsizing spree

CBA sold its asset management business for $2.9b.

Bloomberg reports that Australian banks are steadily trimming their once-sprawling networks as the value of asset sales by financial firms over the past few years have already exceeded $13b (AU$18b).

The latest example of big banks exiting businesses from insurance to wealth advisory came when Commonwealth Bank of Australia announced the sale of its global asset management business for $2.9b (AU$4.13b) to Mitsubishi UFJ Financial Group. This follows an earlier exit from its Indonesian insurance unit and South African digital operations.

In February, the sale of Australia and New Zealand Banking Group (ANZ) of its retail and wealth business in Asia to Singapore’s DBS was also completed in another example of Australian banks retreating from profitable regions like Asia Pacific.

Analysts believe that a number of regulatory roadblocks, from product disclosure to prudential levels, hinder the expansion plans of Australian lenders. Scaling back could give them the necessary boost to meet rising regulatory pressures in their home turf.

They also have to contend with established players like Chinese and Japanese banks who have nothing short of a stranglehold in the region.

“From the perspective of an Australian-based financial services commentator, I see that Sydney and Melbourne based brands are yet to build the same cachet that iconic local brands enjoy on Orchard Road in Singapore,” Grant Thornton partner & national head, Financial Services, Madeleine Mattera said in an interview with Asian Banking & Finance earlier this year. “Trust takes a long time to build and Australian capital and Australian shareholders may not have the patience—particularly as there is no guarantee that the returns are there for an overseas entrant.”

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