Commonwealth Bank of Australia to sell 10% stake in Bank of Hangzhou for A$1.8B

Commonwealth Bank of Australia agreed to sell a 10% stake in China-based Bank of Hangzhou Co. Ltd. to Hangzhou Urban Construction & Investment Group Co. Ltd. and Hangzhou Communications Investment Group Co. Ltd. for expected total gross proceeds of A$1.8 billion, according to a release.

Hangzhou Urban Construction & Investment Group and Hangzhou Communications Investment Group are majority-owned by the municipal government of Hangzhou in Zhejiang province, China.

Commonwealth Bank of Australia, or CBA, agreed with Bank of Hangzhou to retain its remaining shareholding in the Chinese bank of about 5.57% until at least Feb. 28, 2025, subject to certain exceptions. CBA said it would treat this stake as a strategic equity investment.

The deal will likely complete around mid-2022.

CBA also said the deal is estimated to lead to a post-tax gain on sale of about A$340 million once completed.

Commonwealth Bank CEO Matt Comyn said the divestment is consistent with the Australian bank's strategy to focus on its core banking business in Australia and New Zealand.