Westpac Banking Corp. is considering selling its financial planning arm, joining its rivals in potentially off-loading its financial planning business, The Australian Financial Review reported Sept. 6, citing sources.
The Australian banking group had assessed market appetite for its inhouse financial planners, while also considering an asset swap or retaining the division, the sources said. The bank is said to be considering the sale in preparation for any fallout that may emerge from the ongoing banking royal commission.
The lender's potential sale is understood to only cover its inhouse financial planners as it is committed to other parts of its wealth management business, including life insurance and superannuation products.
A Westpac spokeswoman declined to comment on market speculation, the publication reported.
The sources said that one option being assessed by investment banks and the involved companies is an asset swap between Westpac and investment company IOOF Holdings Ltd., but it is unclear if this option is still under consideration.
The plan could see Westpac take IOOF's investment platforms in exchange for the inhouse advisers of BT Financial Group, Westpac's wealth management arm.
An IOOF spokeswoman declined to comment.
The royal commission is investigating potential conflicts in financial services companies and one possible outcome is its recommendation to dismantle so-called vertical integration, where banks develop and sell financial products.
Three of Australia's biggest banks by assets have already moved away from some of their wealth management businesses. Commonwealth Bank of Australia is demerging its wealth management and mortgage broking business, while Australia & New Zealand Banking Group Ltd. has sold off the bulk of its planning units to IOOF. In addition, National Australia Bank Ltd. has plans to spin off its wealth management business and has off-loaded a majority stake in its life business.