(Reuters] – The nation’s No.1 lender, Commonwealth Bank of Australia is selling a stake of China’s Bank of Hongzhou (OTC) for about A$1.8billion ($1.31billion). The No.1 lender announced that it would buy a 10% stake in China’s Bank of Hangzhou, a near two-decade old investment under market pressure.

CBA announced it will sell its shareholding to Hangzhou’s municipal government. This is a common strategy used by Australian retail banks in order to eliminate non-core operations, and instead focus on core services.

China’s banks and insurance have come under increasing pressure due to their non-performing assets, since the debt-laden China Evergrande Group was revealed last year.

CBA, the largest shareholder of Chinese lenders established in 1996, will continue to hold its shareholding of approximately 5.6% at Bank of Hangzhou through February 2025.

Australia’s largest lender was expected to close the deal by mid-2022.

Matt Comyn (CBA Chief Executive Officer) stated, “The sale of a portion of our shareholding is consistent in our strategy to focus our core banking business here in Australia and New Zealand.”

Chen Zhenshan of Bank of Hangzhou stated that the bank “understands” and “respects the decision of CBA”, to reduce its shareholding due in part to strategic considerations and capital allocation.

($1 = 1.3774 Australian dollars)