Wells Fargo reportedly exploring sale of asset management business

By Reuters

October 23, 2020 | 1:10pmEnlarge Image

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Wells Fargo is exploring a sale of its asset management business, in what would be the bank’s biggest shake-up since former Bank of New York Mellon chief executive Charles Scharf joined as CEO last year, people familiar with the matter said.

The potential deal would illustrate how Scharf is looking at drastic moves, beyond cost cuts, as he seeks to turn Wells Fargo around following a years-old sales practices scandal. He has said he is targeting $10 billion in savings annually over the long term.

Wells Fargo’s asset management arm, which managed $578 billion on behalf of customers as of the end of June, could fetch more than $3 billion in a sale, two of the sources said Thursday.

The San Francisco-based bank has discussed a potential deal with asset management companies and private equity firms, according to the sources, who cautioned that a divestment is not certain and asked not to be identified because the matter is confidential.

A Wells Fargo spokesman declined to comment.

Wells Fargo reported a 57 percent drop in its third-quarter profit earlier this month, missing Wall Street’s expectations, as persistent costs continued to haunt the bank.

The bank has been grappling with these costs since 2016, when it entered a settlement with regulators that detailed millions of phony accounts employees had created in customers’ names without their permission to hit sales targets.

Bank executives have signaled repeatedly that the worst of the fallout is in the past, but elevated operating losses have persisted.

The US Federal Reserve has placed restrictions on Wells Fargo’s balance sheet, to be lifted only when the management team can prove it has sufficiently improved risk management and controls.