The deal is expected to generate A$940m ($593m) in gross proceeds for CBA. Credit: Pawan Kawan/Shutterstock.

Commonwealth Bank of Australia (CBA) has sealed a deal to divest its remaining 5.45% stake in Bank of Hangzhou (HZB) to New China Life Insurance (NCI).

The deal is anticipated to generate around A$940m ($593m) in gross proceeds for CBA.

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Bank of Hangzhou, set up in September 1996 and situated in Zhejiang province, China, is publicly traded on the Shanghai Stock Exchange.

Upon completion, the sale is projected to enhance CBA’s Common Equity Tier 1 (CET1) ratio by an estimated 18 basis points, in accordance with the Australian Prudential Regulation Authority’s standards.

This calculation is based on the Group’s risk-weighted assets as of 30 September 2024.

CBA CEO Matt Comyn said: “CBA has been a longstanding shareholder of HZB since its original investment in 2005, and we are pleased to have contributed to the development of HZB into a significant player in retail, wealth management and commercial banking across the Yangtze Delta region.”

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The finalisation of the sale is contingent upon various conditions, including approval from the National Financial Regulatory Administration, a confirmation opinion from the Shanghai Stock Exchange, and the registration of the share transfer by the Shanghai Branch of China Securities Depository and Clearing Corporation Limited.

This transaction is expected to be finalised around mid-2025, provided these conditions are met.

New China Life Insurance, established in 1996, is based in Beijing. It has Central Huijin Investment, a state-owned entity, and China Baowu Steel Group as primary shareholders.

In October 2024, In CBA divested a further 10% stake in Vietnam International Commercial Joint Stock Bank (VIB).