Wells Fargo Mulling Sale Of Asset Management Unit

Megabank Wells Fargo & Co. (WFC) is considering the sale of its asset management business, Reuters reported.

Such a deal is expected to bring in about $3 billion and mark the biggest splash made so far by Wells Fargo since Charles Scharf became its CEO last October.

Wells Fargo’s asset management unit managed $578 billion in assets at the end of June.

Reuters noted that Wells Fargo has had discussions on the possible sale with some asset management firms and private equity entities.

Scharf has been trying to revive Wells Fargo since its reputation was tarnished by a scandal in 2016 involving employees who created fake new accounts without the consent of customers in order to pad their performance figures.

That misconduct compelled the U.S. Federal Reserve to impose restrictions on Wells Fargo’s balance sheet – meaning, the bank must abide by an asset cap until it proves it has sufficient safety protocols in place.

Scharf has also targeted $10 billion in annual cost savings through, among other things, thousands of job cuts.

Wells Fargo has incurred steep losses this year, including a 57% plunge in its recent third-quarter earnings results. The company’s stock has also dropped by about 57% year-to-date.

During a recent earnings call, Scharf said the bank wants to dispose of some non-core businesses.

“I just want to be clear. We are exiting them because they are not core to serving our core customer base on the consumer and large corporate side. We are not exiting them because of the asset cap [limitations],” Scharf said.

Bloomberg noted that the asset management industry has undergone a wave of consolidation in recent years as fees have been cut, while competition from passive fund management has increased.

One of the biggest recent deals included Morgan Stanley’s (MS) $7 billion purchase of Eaton Vance (EV).