Commonwealth Bank of Australia (ASX: CBA) shares are on the move on Tuesday morning.

At the time of writing, the banking giant's shares are up 1% to $159.95.

Why are CBA shares rising?

Today's gain may have been driven by news that the big four bank is making a divestment.

According to the release, CBA has entered into a binding sale agreement to sell its remaining 5.45% shareholding in Bank of Hangzhou Co. (HZB).

Established in September 1996 and located in the city of Hangzhou in the Zhejiang province of China, HZB is a regional commercial bank that is listed on the Shanghai Stock Exchange. It is principally engaged in the provision of banking and related financial services.

CBA has agreed to sell its stake to New China Life Insurance Co. (NCI), which is a Beijing headquartered life insurance company that is dual listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

The company revealed that the deal with NCI is expected to see total gross proceeds of approximately $940 million.

Though, completion of the transaction is subject to a number of conditions. This includes regulatory approval from the National Financial Regulatory Administration, receipt of a confirmation opinion from the Shanghai Stock Exchange, and registration of the share transfer by the Shanghai Branch of China Securities Depository and Clearing Corporation.

But if all goes to plan, the completion of the transaction is currently expected to occur around mid-2025.

Upon completion, the transaction is expected to deliver a pro forma uplift to the bank's CET1 ratio of approximately 18 basis points on an Australian Prudential Regulation Authority basis. This is based on the bank's risk weighted assets as of 30 September 2024.

Management commentary

Commenting on the agreement, CBA's chief executive officer, Matt Comyn, said:

CBA has been a longstanding shareholder of HZB since its original investment in 2005, and we are pleased to have contributed to the development of HZB into a significant player in retail, wealth management and commercial banking across the Yangtze Delta region.

CBA sold a 10% stake in HZB in March 2022 for approximately $1.8 billion and agreed at that point not to sell its remaining stake until February 2025.

At the time, Comyn revealed that the sale was "consistent with our strategy to focus on our core banking business in Australia and New Zealand."

Following today's move, Australia's largest bank's shares are now up 37% over the past 12 months.