Commonwealth Bank of Australia sells 10% stake at Bank of Hangzhou for $1.3b

CBA has agreed to maintain a 5.57% shareholding in the bank until Feb 2025.

The Commonwealth Bank of Australia (CBA) has entered into a binding sale agreement to sell its 10% stake in the Bank of Hangzhou (HZB) for about $1.31b (A$1.8b) to the Hangzhou Urban Construction & Investment Group and Hangzhou Communications Investment Group.

The two buying entities are majority-owned by the Hangzhou Municipal Government.

CBA has agreed to maintain a 5.57% shareholding in HZB until at least 28 February 2025.

The transaction is estimated to result in a post-tax gain on sale of approximately $247.5m (A$340m) for CBA, and is expected to be completed by mid-2022.

CBA Chief Executive Officer Matt Comyn said that the reallocation of part of their bank's of shareholding to local entities in Hangzhou “will support the further expansion of HZB.”

“At the same time, the partial sale of our shareholding is consistent with our strategy to focus on our core banking business in Australia and New Zealand. Our ongoing shareholding in HZB following completion of the transaction will enable us to continue to support its development as one of China’s leading city commercial banks, and complement our relationships in the region,” Comyn said, commenting on the sale.

(US$1 = A$1.37)