The Australian bank, having been through a painful period for compliance issues and led by a new CEO, has decided to spin off its asset management arm in an IPO.

Commonwealth Bank of Australia, now led by a new chief executive as it aims to push beyond regulatory woes, announced it intends to float its asset management business on the stock market. 

The decision follows a strategic review of Colonial First State Global Asset Management that was initially announced last September. A significant player, CFSGAM managed A$219 billion ($170 billion) of assets, as of the end of last year.

CBA said it intends to pursue an initial public offering of the entity by the end of 2018, subject to how markets perform and regulatory approvals.

To prepare for the IPO, CBA and its asset management arm have approached candidates who have agreed to join the board of CFSGAM as independent non-executive directors: John Mulcahy (who would be appointed as Chairman), Susan Doyle, James Millar, Gail Pemberton and Richard Wastcoat.

Additional directors may be approached to join the board ahead of the potential IPO. Mark Lazberger will continue in his role as chief executive of CFSGAM and would be appointed as an executive director of the board, CBA said.

As reported earlier this year, Matt Comyn has been appointed as new CEO. He took over at the start of April, taking over from Ian Narev, who announced last August he was stepping down, having been in the role for more than six years. The bank has been hit by regulatory issues, hitting its shares late last year. Last August, Austrac (Australian Transaction Reports and Analysis Centre) started legal action against CBA, linked to claims that the lender breached AML and counter-terrorism financing controls. CBA said it has provided A$375 million for a civil penalty based on latest information and advice. In a separate case, CBA has provided $200 million for expected costs of regulatory, compliance and related matters, it said.