Wells Fargo Looks To Shed Asset Management Unit: Report

Aditya Raghunath
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Wells Fargo & Co (NYSE: WFC) is in plans to delink its asset management business and is currently holding talks with private equity firms and peers in the asset management space, according to Reuters. Based on initial estimates, the deal could be valued at over $3 billion.

In the third-quarter earnings call, CEO Charles Scharf hinted that the bank would exit some of its non-core business. However, there have been no official comments on the proposed sale of its asset management unit.

What Happened: Wells Fargo expects to receive bids for its asset management business unit sometime this month, according to a Bloomberg report.

Wells Fargo’s asset management division held around $607 billion at the end of September, an increase compared to $578 billion in its managed portfolio at the end of June.

Since 2016, the bank is working to control costs and Scharf is aiming for $10 billion in annual savings over the long term, Reuters noted.

Why Does It Matter: The asset management space is gradually consolidating through mergers, acquisitions, and divestments.

Earlier this month, Morgan Stanley (NYSE: MS) acquired Eaton Vance Corp (NYSE: EV) — an investment management company with $500 billion assets under management. The cash and stock deal was valued at $7 billion.

On Oct. 2, Trian Fund Management L.P bought stakes in Invesco Ltd (NYSE: IVZ) and Janus Henderson Group PLC (NYSE: JHG) for a collective investment of $900 million. Trian’s broader strategy revolves around the notion of introducing a new asset management company that can take on industry bigwigs like BlackRock Inc (NYSE: BLK).

Price Action: WFC stock gained 2.42% on Thursday to close at $23.25.

Photo courtesy: Ken Teegardin via Flickr

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