A Wells Fargo branch in New York. (Photo:Bloomberg)
Wells Fargo is reportedly intalks to sell its retirement-plan services business to PrincipalFinancial Group for as much as $1 billion or more.
|The move comes as Wells Fargo tries to trim its operations tocope with the Federal Reserve-imposed cap it has on asset growth asa result of its fake-accounts scandals.
|According to a Reuters report onSunday citing unnamed sources, the bank's retirement plan servicesunit — which includes a 401(k) business — could be merged withthat of the insurer and financial services company. Such a dealcould be reached later this month, the report says, though neitherfirm addressed the matter over the weekend.
|On Monday, though, Wells Fargo said it “does notcomment on market rumors or speculation and continues to serveretirement clients each day.”
|While Wells Fargo is based in SanFrancisco, its wealth operations are headquartered in St. Louis.Principal Financial has its home in Des Moines, Iowa.
|The news comes several monthsafter the embattled bank sold 52 branches in the Midwest toFlagstar Bancorp. Also last year, Wells Fargo got rid of its PuertoRico auto-loan business for about $1.7 billion.
Latest Quarter
In the fourth quarter of 2018, Wells Fargo's net income fellabout 1.5% to $6.06 billion, or $1.21 per share, vs. $6.15 billion,or $1.16 per share, a year ago. Revenue dropped 5% to $21billion.
|As of Dec. 30, Wells Fargo has 13,968 advisors, down nearly 600from a year ago and more than 100 from the prior quarter. Since thebank's fake-accounts scandal erupted in fall 2016, when it had15,086 registered reps, the bank's wealth unit has lost 1,118advisors.
|Total assets also are declining. They stand at $1.7 trillion,down 10% from last year due to lower market valuations and netoutflows, the bank says.
|The unit's net income was $689 million for the quarter, though,which is up 2% from the year-ago period but down 6% from the thirdquarter. Average loan balances of $75 billion, however,rose 3% from last year.
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Janet Levaux
Janet Levaux, MA/MBA, is Editor in Chief of ThinkAdvisor & Investment Advisor. She's covered the financial markets since 1991 and advisors since 2005. Janet studied at Yale, Johns Hopkins SAIS and St. Mary's College of California. She's also lived and worked in Asia, Europe and Latin America, raised two sons, and won a Neal Award for top news coverage in 2020.
