Wells Fargo WFC has signed a definitive agreement to sell its Corporate Trust Services (CTS) business to Australian-based Computershare Limited for $750 million. This is in line with the company’s strategy to focus on activities essential to its consumer and business customers. The transaction, which is expected to close in the first half of 2021, is still subject to customary closing conditions.
Computershare is one of the world’s leading providers of corporate trust, stock transfer and employee stock ownership plans.
Wells Fargo’s CTS business provides a wide range of services, such as trust and agency in relation to debt securities issued by public and private entities, government agencies as well as the banking and securities industries.
Computershare executive vice president of operations Frank Madonna will lead the acquired operations as nearly 2,000 CTS employees across the United States are expected to transfer as part of the deal.
Head of Wells Fargo Commercial Capital, David Marks, said, “Additionally, we believe that Computershare’s similar approach to service and focus on developing innovative products will benefit our customers and our colleagues in Corporate Trust Services in the future.
Similarly, Madonna said, “We are confident that as our businesses come together post-closing, our client proposition will be unrivaled in North America.”
Wells Fargo has taken such steps in an effort to focus on its core businesses, increase efficiency and strengthen its balance sheet. The pandemic-induced economic downturn accelerated this initiative.
Last February, Wells Fargo signed an agreement to sell its asset management business to private equity firms GTCR LLC and Reverence Capital Partners, LP for $2.1 billion. In January, the bank announced a definitive agreement to sell its Canadian direct equipment financing business to The Toronto-Dominion Bank TD for an undisclosed amount.
Last December, the company agreed to divest its private student loan portfolio and its Centurion Life Insurance unit. Earlier in June, Wells Fargo sold its global alternative investment feeder fund platform.
After the disclosure of the sales scandal in September 2016, Wells Fargo faced several sanctions, including a cap imposed by the Federal Reserve on asset growth in early 2018. However, the company has come a long way in its journey. recovery, particularly with the central bank’s recent approval of its risk management and governance overhaul plan. The company continues to invest in businesses to strengthen its compliance and risk management capability.
Wells Fargo shares have gained 61.7% in the past six months, outpacing the 60.8% growth recorded by the industry.
Currently, Wells Fargo carries a Zacks rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent stages of business restructuring by other banks
There has recently been an increase in corporate restructuring efforts in the financial sector. In January 2021, SVB Financial Group The SIVB has signed a share and cash agreement to acquire Boston Private Financial Holdings, Inc. BPFH for $900 million to bolster its private banking and wealth management offerings.
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