Aussie bank eyes exit from some Asian operations

Aussie bank eyes exit from some Asian operations

SYDNEY (Dow Jones): Commonwealth Bank of Australia is looking for a quick exit from its troubled Thailand and Indonesian life insurance operations in an effort to reduce its exposure to Southeast Asia.

Many see the move as a precursor to CBA seeking a sale of other Asian life insurance assets it acquired through the Colonial Ltd. acquisition in June 2000, fund managers said Wednesday.

"It wouldn't surprise investors if they sold off the assets piece by piece," said Shawn Burns, a fund manager at Zurich Financial Services. "They (Indonesia and Thailand) aren't very strong assets," he added.

CBA's Indonesian and Thailand assets have a book value of around A$55 million.

Sydney-based CBA said Tuesday it is in talks with a number of parties for the sale of its 50 percent joint venture holding in its Bangkok-based life insurance business-Ayudhya CMG Life Assurance PCL, which has been losing money since 1995.

The business posted a net loss of 490 million baht in the 12 months to December 1999, which was more than double its losses the year before.

Ayudhya CMG Life Assurance has said its board has approved a plan to seek a delisting of its securities from the stock exchange but that has been deferred until CBA can find a buyer for its stake.

CBA also holds a 50 percent stake in Jakarta-based PT Astra CMG Life, which it wants to divest as well.

CBA's life insurance joint venture partner in Indonesia, Astra International, also is in trouble. As Indonesia's largest car maker, it is battling stiff competition amid economic turmoil. It has total debt around US$1 billion and has said it needs to sell assets to be able to make a US$200 million principal debt repayment in December next year, or be forced to return to the banks and renegotiate its payment schedule.

"The life insurance market throughout Asia is extremely competitive, but a lot of foreign companies see it as a great opportunity because of the massive populations," a person familiar with the CBA negotiations said. "But there are risk issues in these embryonic markets."

Still, the Thailand and Indonesian life insurance businesses represent a small part of CBA's Asian business.

CBA took control of the CMG funds management and life insurance assets in Hong Kong, Malaysia, Vietnam, Thailand, Indonesia, the Philippines and China through its A$9.4 billion purchase of Colonial.