Wells Fargo Offloads Institutional Retirement And Trust Business The firm has sold the business to Principal Financial Group for $1.2 billion. Alicia McElhaney April 09, 2019 Christopher Dilts/Bloomberg Wells Fargo is offloading its institutional retirement and trust business by selling it to Principal Financial Group, the two announced Tuesday. Principal, a Des Moines, Iowa-based asset manager will pay $1.2 billion in cash and debt for the business, according to its announcement. “A combination with the Principal team creates one of the largest retirement providers in the industry,” said Joe Ready, head of the institutional retirement and trust business, in a statement. The news comes just weeks after Wells Fargo announced that its chief executive officer and president, Tim Sloan, would retire. The lines of business Principal will acquire include the defined contribution, defined benefit, executive deferred compensation (non-qualified plans), institutional trust and custody, and institutional asset advisory businesses, according to Principal’s presentation on the deal. Between $400 million and $500 million of the $1.2 billion purchase price will be funded through new debt, according to Principal. The rest will be paid in cash. The deal also includes a $150 million earn-out, which is tied to revenue retention and will be paid two years after the deal closes, according to Principal. Insurers Look Beyond the Fixed Income Horizon for Yield[/paste:font] “The acquisition will bring expanded capabilities, reach, and scale; fueling our ability to compete, invest, and grow to help more people to achieve their retirement outcomes,” Dan Houston, the CEO of Principal, said in a statement. As of December 31, 2018, Wells Fargo’s institutional retirement and trust unit had $827 billion in assets under administration, according to its announcement. [II Deep Dive: Wells Fargo Asset Management Chief Kristi Mitchem Moves to BMO] Wells Fargo was fined $100 million by the Consumer Financial Protection Bureau back in 2016 after employees engaged in a widespread practice of secretly opening unauthorized deposit and credit card accounts for the bank’s customers, the CFPB’s website shows. In 2017, the company said it completed a third-party review and its chief executive officer apologized for the sales practice. The firm was sanctioned by the U.S. Federal Reserve Board in 2018 for “widespread consumer abuses and compliance breakdowns.” The sanctions made it so that Wells Fargo could not grow any larger than the size of its assets at the end of 2017. The sanctions from the Federal Reserve are still in effect. Additionally, in 2018, Wells Fargo agreed to pay $2.09 billion in penalties to settle claims relating to misrepresentation of the quality of residential mortgage loans that dated back to before the 2008 financial crisis. In addition to the firm’s chief executive officer stepping down in March, the head of its asset management business, Kristi Mitchem also left the firm this year. Mitchem left Wells Fargo in January for BMO Global Asset Management, Institutional Investor reported at the time.
Principal to acquire Wells Fargo's record-keeping business Principal Financial Group will acquire the institutional retirement and trust business of Wells Fargo & Co. for $1.2 billion. Principal will add 3.9 million retirement plan participants from Wells Fargo after the deal closes in the third quarter for a total of 7.5 million participants. (Pensions & Investments)
Wells Fargo exec: Sale of asset management unit not in the cards Wells Fargo & Co. might be preparing to offload its institutional retirement and trust business in a $1.2 billion deal, but the move, and other efforts to streamline its business, aren't an indication that the firm is considering putting its asset management unit on the chopping block next, a company executive said. (Pensions & Investments)
'Wells Fargo should change today': Shareholders disrupt bank's annual meeting Nearly a dozen shareholders disrupted opening remarks at Wells Fargo’s annual meeting in Dallas Tuesday, pressing executives to answer for a series of scandals that have rocked the bank. “Wells Fargo should change today!” one shareholder shouted as she was ushered out with the help of Dallas-Fort Worth airport security. (American Banker)
U.S. bank regulator will vet next Wells Fargo CEO A top U.S. bank regulator said he will vet Wells Fargo's pick for its next chief executive, which could complicate the scandal-hit lender's efforts to find a new CEO. The Comptroller of the Currency told Congress he would use special legal powers the regulator typically reserves for overseeing financially troubled lenders. (Reuters)
Wells Fargo will stop accepting loan applications from most independent car dealers, over concerns about defaults. from Hustle
I used to be in the Wells "family". Owned their stock, held a mortgage, a checking account, a saving account, a credit card, several brokerage accounts... Their customer services were excellent, very helpful and reachable. Lately services were so bad I sold their stock in Feb, exited their brokerage accounts, refinanced my mortgage elsewhere, closed my saving account and will get out completely. Through this no one either talked or reached out to me through phone, email or text and I am supposedly a "Prime Customer". I don't think anyone there care anymore.