* Bank says investment mgt unit’s IPO expected by end of 2018
* Could raise $2.3 bln, sources have said earlier
* Banks in midst of power judicial inquiry on misconduct (Recasts; Adds Commonwealth Bank quote and context)
By Paulina Duran
SYDNEY, April 17 (Reuters) - Commonwealth Bank of Australia , the country’s largest bank, unveiled a plan to list its investment management business this year, at a time when lenders are being investigated by a powerful judicial inquiry and face scrutiny from authorities.
A listing of Colonial First State Global Asset Management which has A$219 billion in assets under management, could raise about A$3 billion ($2.3 billion), sources have previously said.
“In making our assessment, we examined long-term Commonwealth Bank shareholder value and also considered the ability of CFSGAM to serve the interests of its clients, attract and retain key personnel and better grow its business,” the bank said in a statement.
The lender announced a review of the investment management business in September last year. On Tuesday, it did not give details of size or valuation but said the domestic IPO is expected by the end of 2018 and that John Mulcahy would be appointed as chairman of the listed business.
Australia’s financial sector is under pressure after the Royal Commission’s ongoing probe shed light on numerous cases of misconduct. The commission’s final recommendations after year-long hearings could lead to criminal or civil prosecutions as well as greater regulation on the sector.
And the Australian competition regulator said it plans to review the powers of the country’s four largest banks, amid concerns that lending caps have cut competition and high barriers to entry have stifled rivals.
Commonwealth Bank would become the second large lender to offload its funds unit in recent times. Australia and New Zealand Banking Group sold its wealth management unit to IOOF Holdings for A$975 million in October, joining the rush of Australian banks quitting non-core and scandal-hit divisions to boost capital.
Shares of Commonwealth Bank have shed 9.4 percent in the year to date, compared with a 3.7 percent fall for the Australian benchmark index. ($1 = 1.2840 Australian dollars) (Reporting by Paulina Duran in Sydney and Aaron Saldanha in Bengaluru; Editing by Edwina Gibbs and Muralikumar Anantharaman)