The decision followed a strategic review of the business, which is known as First State Investments outside of Australia.
It was concluded that Colonial would “provide greater benefits” under an independent ownership model.
CBA intends to pursue an IPO before the end of 2018, subject to market conditions and necessary approvals.
Stacking the board
In preparation, the bank has approached several candidates who have agreed to join the board of Colonial as independent non-executive directors.
Among them is John Mulcahy, a former chief executive of insurance, banking and superannuation firm Suncorp, who would be appointed chairman.
Colonial’s current chief executive Mark Lazberger will continue in his role and be appointed an executive director of the board.
Strategic review
Life insurance and Colonial accounted for almost 80% of CBA’s wealth management earnings last year, according to local newspaper Sydney Morning Herald.
At the time the review was announced, the bank said it had no plans to sell its financial planning and superannuation platform businesses.
In September, CBA sold it life insurance businesses in Australia and New Zealand to AIA Group for A$3bn.
Regulatory scrutiny
CBA, along with its three main rivals and financial services firm AMP, has been under the cosh recently.
Australia’s Royal Commission into banking, superannuation and financial services is currently doing a deep-dive review of the industry, specifically non-compliant conduct by financial advisers.
On 13 April, CBA entered into an enforceable undertaking with the Australian Securities and Investments Commission (Asic) after it identified and self-reported that some advice customers did not receive an annual review they were charged for.
Chief executive Matt Comyn, who only took to the helm on 9 April 2018, said on Friday: “Next week the Royal Commission will hear more about issues in financial advice where we have failed our customers and we need to listen and learn from what we hear.
On Monday, an AMP executive was grilled by the Royal Commission over the firm intentionally misleading the Asic over charging fees to clients despite not providing any service.
Colonial First State Global Asset Management
Colonial has offices across Europe, the UK and Asia Pacific. As at 31 December 2017, it managed A$219bn of assets on behalf of institutional investors, pension funds, wholesale distributors, investment platforms, financial advisers and their clients.