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(Reuters) – Westpac Banking Corp said on Wednesday it would sell its general insurance arm to German insurer Allianz for A$725 million ($535 million), further trimming its portfolio to beef up capital and focus on its core banking business.
Australia’s third-largest bank expects a small post-tax gain in fiscal 2021 from the sale, which it says will add around 12 basis points to its common equity tier 1 ratio.
The sale comes a day after Australia’s bank regulator forced Westpac to add 10% to the amount of cash it keeps on hand until an independent review of its risk management is finished.
Westpac is looking to sell several of its underperforming units in response to the disruption caused by the COVID-19 pandemic and after a record fine in September for enabling millions of improper payments, including to people exploiting children.
For Allianz, the deal will boost its presence in Australia’s general insurance market, where it is among the top five biggest players.
Westpac’s general insurance business offers home, car, travel and life insurance. The bank will also sign a 20-year exclusive agreement for Allianz to distribute general insurance products to Westpac customers.
($1 = 1.3563 Australian dollars)
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