(Nov 16): Commonwealth Bank of Australia (CBA) on Thursday said it will sell its 99% stake in Indonesian unit PT Bank Commonwealth (PTBC) to Singapore's OCBC, exiting a non-core business after more than two decades.

The A$220 million (RM670.6 million) sale to OCBC's PT Bank OCBC NISP advances CBA's strategy of quitting businesses outside of retail banking in Australia, where it has a quarter of the country's A$2 trillion in mortgages.

OCBC intends to acquire the remaining 1% of PTBC from the other shareholders, OCBC said in a separate statement Thursday.

CBA and Australia's other so-called "Big Four" lenders have been trying to sell offshore and non-banking financial services businesses since a regulatory crackdown six years ago.

A year and a half of interest rate hikes have put further stress on the sector as their core customers — home loan borrowers — shop around for better deals.

OCBC said the acquisition will add scale and deepen its presence in Indonesia. OCBC counts Indonesia as one of its key markets besides Greater China, Singapore and Malaysia.

The deal also marks OCBC Group CEO Helen Wong's first acquisition deal since leading the Southeast Asia's second largest lender by assets in 2021.

Wong told Reuters in an interview in October last year that OCBC, also Singapore's second biggest bank, is hunting for acquisitions in Indonesia to speed up growth.

"As there is little overlap in customer relationships between OCBC Indonesia and PTBC, the proposed acquisition is expected to create synergies and strengthen the franchise value of OCBC Indonesia," OCBC's statement said.

PTBC focuses on retail and small and medium-sized enterprises segments, providing a range of banking and wealth management products.

Its net asset value amounted to 4.1 trillion rupiah while net tangible asset value stood at 3.5 trillion rupiah as at Sept 30, 2023, according to OCBC.

CBA expects the sale to be broadly neutral to its common equity tier 1 ratio — a closely watched measure of spare cash — which stands at 11.8%, as at Sept 30.

The sale is expected to close in the second or third quarter in 2024, subject to regulatory approvals.