CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

CBA share price: where next following CommInsure sale?

Bank stocks fell on Monday, though CBA witnessed more pronounced declines after announcing plans to sell its general insurance business.

CBA share price: where next following CommInsure sale? Source: Bloomberg

The Commonwealth Bank of Australia (ASX: CBA) saw its share price fall on Monday after the company announced it had entered into an agreement with Hollard Group to sell its general insurance business, CommInsure General Insurance.

The deal involves an upfront consideration of $625 million and will see Commbank enter into a long-term strategic alliance with Hollard Group to distribute home and vehicle insurance products to the bank’s customers. Positively, the bank noted that it would continue to earn income on the distribution of these products.

The bank also said it anticipated it would receive a pre-finalisation dividend, though the impact of such a dividend was not quantified.

This caps off a flurry of divestment deals from Australia’s big four banks and other financial players, which have seen many of these large-caps spin off their insurance and wealth management businesses – following the Hayne Royal Commission.

What's your view on bank stocks? Whatever you think, you can use CFDs to trade both rising and falling markets, through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) CBA using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘CBA’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

Alternatively, you can invest in shares directly through our share trading service.

Consequences in focus

CBA provided the market with some top level impacts of its deal with Hollard.

On the bottom-line, the bank said it would book an after-tax gain on the sale of $90 million, inclusive of some $130 million in transaction costs.

Moreover, this deal is expected to positively impact Commonwealth Bank’s capital position – with the bank saying its Common Equity Tier 1 Capital would get a $400 million bump, equivalent to an increase of 8 basis points.

Management noted that they expected the deal to be completed in calendar 2022, though the sale still needs approval from APRA.

CBA share price

Investors responded negatively to this announcement, with the stock down 3.91% to $99.64 by 11:11 am.

Despite that share price weakness, the stock remains well in an uptrend, with CBA up 20% in the last six months.

Beyond CBA, Australia’s other big four banks also faced selling pressure on Monday, with ANZ, WBC and NAB all witnessing substantial price declines.

Management views

Speaking of the deal, Commonwealth Bank CEO, Matt Comyn said:

'The transaction is consistent with CBA's strategy to deliver differentiated customers proposition and the best integrated digital experiences. CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers.'

By comparison, Hollard Holdings Australia's Managing Director, Richard Enthoven said:

'We are incredibly excited by today's announcement. THe synergies between CBA and Hollard extend well beyond strategy and market segmentation. We have a shared vision for the future of home insurance, the potential for better customer outcomes, and an exciting role for digital innovation along our entire value chain.'

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.