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  • As part of an effort to simplify its operations, Westpac (WBC) said it will sell its lenders mortgage insurance (LMI) business to Arch Capital
  • The sale will also make Arch Westpac’s exclusive LMI supplier for the next 10 years
  • While Westpac will record a loss on the sale from separation and transaction costs, the deal will also add roughly seven basis points to its common equity tier one capital ratio
  • It’s the latest step in the bank’s strategy to cut costs by focusing more on its core domestic and New Zealand businesses
  • Westpac is down 0.87 per cent to $24.46 per share

As part of an effort to simplify its operations, Westpac (WBC) said it will sell its lenders mortgage insurance (LMI) business to Arch Capital.

The sale, which is expected to close by the end of August this year, will also make Arch Westpac’s exclusive LMI supplier for the next 10 years.

While Westpac — Australia’s third-largest lender — will record a loss on the sale from separation and transaction costs, as well as an $84 million write-down in goodwill that was announced in mid-February, the deal will also add roughly seven basis points to its common equity tier one capital ratio.

It’s the latest step in the bank’s strategy to cut costs by focusing more on its core domestic and New Zealand businesses.

“Westpac is pleased to be entering into a long-term partnership with Arch as LMI is an important product that helps the Group make home ownership more accessible for more Australians,” said Jason Yetton, Westpac’s chief executive of Specialist Businesses and Group Strategy.

“The sale continues the simplification of our business and builds on our progress in becoming a simpler, stronger bank focussed on consumer, business and institutional banking,” he added.

Upon completion of the sale, Westpac said it will retain responsibility for certain legacy matters and provide protection to Arch through a combination of customary warranties and indemnities.

Westpac is down 0.87 per cent to $24.46 per share at 3:30 pm AEDT.

WBC by the numbers
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