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.