Wells Fargo Looks To Shed Asset Management Unit: Report

In the third-quarter earnings call, CEO Charles Scharf hinted that the bank would exit some of its non-core business. However, there have been no official comments on the proposed sale of its asset management unit.

What Happened: Wells Fargo expects to receive bids for its asset management business unit sometime this month, according to a Bloomberg report.

Wells Fargo’s asset management division held around $607 billion at the end of September, an increase compared to $578 billion in its managed portfolio at the end of June.

Since 2016, the bank is working to control costs and Scharf is aiming for $10 billion in annual savings over the long term, Reuters noted.

Why Does It Matter: The asset management space is gradually consolidating through mergers, acquisitions, and divestments.

Earlier this month, Morgan Stanley MS acquired Eaton Vance Corp EV — an investment management company with $500 billion assets under management. The cash and stock deal was valued at $7 billion.

On Oct. 2, Trian Fund Management L.P bought stakes in Invesco Ltd IVZ and Janus Henderson Group PLC JHG for a collective investment of $900 million. Trian’s broader strategy revolves around the notion of introducing a new asset management company that can take on industry bigwigs like BlackRock Inc BLK.

Price Action: WFC stock gained 2.42% on Thursday to close at $23.25.

Photo courtesy: Ken Teegardin via Flickr