(Bloomberg) -- Wells Fargo (NYSE:WFC) & Co. plans to sell its asset-management business to two private equity firms, part of Chief Executive Officer Charlie Scharf’s efforts to dump non-essential operations and help the bank emerge from three years of scandal.
The company agreed to sell Wells Fargo Asset Management to private equity firms GTCR LLC and Reverence Capital Partners for $2.1 billion, according to a statement Tuesday. The unit has $603 billion of assets under management and employs more than 450 investment professionals.
Scharf, who took the reins in late 2019, has conducted deep reviews of Wells Fargo’s businesses, and said earlier this year that divestitures would help improve the company’s focus. He listed asset management, corporate trust and rail as units that could be among the targets.
“This transaction reflects Wells Fargo’s strategy to focus on businesses that serve our core consumer and corporate clients, and will allow us to focus even more on growing our wealth and brokerage businesses,” Barry Sommers, CEO of Wells Fargo’s wealth and investment-management division, said in the statement.
The bank agreed in December to divest its $10 billion private student-loan book to a group including Apollo Global Management (NYSE:APO) Inc. and Blackstone Group (NYSE:BX) Inc., and has been exploring selling its corporate-trust business.
Wells Fargo has been struggling under an asset cap imposed by the Federal Reserve to punish the lender for a series of lapses in governance and risk management. In one of the first signs of success in the drive to escape the penalty, the company secured the Fed’s acceptance of a proposal it submitted in September to overhaul operations.
Not everything is on the chopping block. San Francisco-based Wells Fargo decided to keep its private-label credit-card unit after reaching out to potential buyers last year, a person with knowledge of the matter said earlier this month.
The asset-management deal, which is expected to be completed in the second half of 2021, will leave Wells Fargo with a 9.9% equity interest in the operation.
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