(Recasts; adds details on CBA and context)
May 23 (Reuters) - Commonwealth Bank of Australia (CBA) is selling its 37.5 percent stake in a Chinese life insurer to Japan's Mitsui Sumitomo Insurance Co for 3.2 billion yuan ($502.67 million), in a bid to simplify its portfolio and focus on its core banking business.
CBA said on Wednesday it will record an after-tax gain of about A$450 million ($341.01 million) on the sale of the stake in BoComm Life Insurance, which it jointly owns with China's Bank of Communications Co Ltd.
Mitsui Sumitomo is a unit of Japan's MS&AD Insurance Group Holdings Inc.
CBA said the completion of the sale will satisfy a condition to the sale of its life insurance businesses in Australia and New Zealand to Hong Kong's AIA Group announced in September last year.
The deal follows a similar trend among major Australian banks to trim their capital requirements, with peer Australia and New Zealand Banking Group exiting a Cambodian joint venture earlier this month.
CBA, Australia's largest bank by market value, also said it is contributing about 1.13 billion yuan to a capital raising by BoComm Life Insurance, which would be conducted before the transaction completed.
The bank said it expects its common equity tier 1 ratio to increase by 13 basis points following the conclusion of the transaction, which is subject to regulatory clearance in China. ($1 = 1.3196 Australian dollars) ($1 = 6.3660 Chinese yuan renminbi) (Reporting by Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta and Muralikumar Anantharaman)