A major bank has offloaded its financial advice group to an accounting network as it seeks to exit a business estimated to incur a post-tax loss of approximately $13 million.
Accounting network buys major bank-owned advice group
Commonwealth Bank of Australia (CBA) has entered into an agreement to sell Count Financial Limited to ASX-listed CountPlus Limited for $2.5 million.
CountPlus has a historical corporate relationship with Count Financial and has equity holdings in 15 Count Financial member firms.
The transaction is subject to a CountPlus shareholder vote to be held in an Extraordinary General Meeting in August 2019 and completion is expected to occur in October 2019.
Following completion of the transaction, CBA also intends to sell its 35.85 per cent shareholding in CountPlus, subject to market conditions.
From a financial perspective, the transaction will result in CBA exiting a business that, in FY19, is estimated to incur a post-tax loss of approximately $13 million.
It is understood that CBA will continue to support and manage customer remediation matters arising from past issues at Count Financial, including after completion of the transaction.
CBA will provide an indemnity to CountPlus of $200 million and all claims under the indemnity must be notified to CBA within four years of completion.
This indemnity amount represents a potential contingent liability of $56 million in excess of the previously disclosed customer remediation provisions that CBA has made in relation to Count Financial of $144 million.
“This is a strategic acquisition, creating a strong professional accounting and financial advisory network aligned by its shared values, mutual success and sense of community,” said CountPlus managing director and chief executive Matthew Rowe.
“The board and executive team at CountPlus are focused on a clear strategy for growth, and building a scalable and sustainable, customer-centric professional service network.”
The sale follows CBA’s commitment in June 2018 to the demerger of NewCo, which includes Colonial First State, Count Financial, Financial Wisdom, Aussie Home Loans and CBA’s minority shareholdings in ASX-listed companies CountPlus and Mortgage Choice.
Following completion of the transaction, NewCo will comprise Colonial First State, Financial Wisdom, Aussie Home Loans and CBA’s 16 per cent stake in Mortgage Choice.
CBA will continue to focus on the exit of these businesses, following recommendations from the royal commission.