The Westpac Banking Corp (ASX: WBC) share price is trading lower on Thursday morning despite announcing another asset sale.
At the time of writing, the banking giant's shares are down 0.3% to $24.60.
What did Westpac announce?
This morning Westpac announced that it will be offloading yet another non-core business.
According to the release, Australia's oldest bank has signed an agreement to sell its Westpac Lenders Mortgage Insurance (WLMI) business to Arch Capital (Arch).
As part of the deal, Westpac has entered into a 10-year exclusive supply agreement for Arch Capital to provide Lenders Mortgage Insurance (LMI) to the company.
Westpac will also retain responsibility for certain legacy matters and provide protection to Arch Group through a combination of customary warranties and indemnities.
What are the terms?
The release explains that the sale price will be at book value, which will be determined at completion. The transaction also includes small, fixed annual payments to Westpac over the next 10 years.
However, Westpac will record a loss on sale in FY 2021 from the separation and transaction costs, along with an $84 million write down in goodwill that was previously announced with its first quarter update.
Despite this, though, the transaction is expected to add approximately 7 basis points to Westpac's Common Equity Tier 1 capital ratio.
Westpac's Chief Executive Specialist Businesses & Group Strategy, Jason Yetton, commented: "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."
Mr Yetton also spoke positively about its partnership with Arch Group for LMI.
He added: "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."
Completion of the transaction remains subject to various regulatory approvals. However, management expects completion to occur by the end of August 2021.
Today's decline hasn't been able to take any of the shine off the Westpac share price performance this year. Since the start of 2021, Westpac's shares are up an impressive 25.5%.
