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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Principal Financial Group, Inc.    PFG

PRINCIPAL FINANCIAL GROUP, INC.

(PFG)
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Exclusive: Wells Fargo explores sale of asset management business - sources

10/22/2020 | 09:42pm EST
Warning signs for coronavirus disease (COVID-19) are seen on a Wells Fargo bank door in New York

(Reuters) - Wells Fargo & Co is exploring a sale of its asset management business, in what would be the U.S. 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 on Thursday.

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.

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% 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 U.S. 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.

Scharf told analysts on the bank's third-quarter earnings call this month that he expected to create some room on Wells Fargo's balance sheet by exiting 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," Scharf said.

The asset management business, which is part of Wells Fargo's wealth and investment management division, offers mutual funds and retirement products. Wells Fargo plans to keep its wealth management business that caters to high-net worth clients, the sources said.

The wealth and investment management division is led by Barry Sommers, the former head of JPMorgan Chase & Co's wealth management business that Scharf recruited in June.

Wells Fargo had started to trim the division even before Scharf because CEO. It sold its retirement plan services business to Principal Financial Group Inc last year for $1.2 billion.

(Reporting by David French in New York; Additional reporting by Imani Moise and Joshua Franklin in New York; Editing by Daniel Wallis)

By David French


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF NEW YORK MELLON CORPORATION (THE) 1.32% 40.65 Delayed Quote.-19.23%
JPMORGAN CHASE & CO. 0.91% 122.34 Delayed Quote.-13.03%
PRINCIPAL FINANCIAL GROUP, INC. 1.79% 52.28 Delayed Quote.-6.62%
WELLS FARGO & COMPANY 1.34% 29.55 Delayed Quote.-45.07%
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Financials (USD)
Sales 2020 14 672 M - -
Net income 2020 1 341 M - -
Net Debt 2020 - - -
P/E ratio 2020 11,3x
Yield 2020 4,29%
Capitalization 14 363 M 14 363 M -
Capi. / Sales 2020 0,98x
Capi. / Sales 2021 0,94x
Nbr of Employees 17 601
Free-Float 56,8%
Chart PRINCIPAL FINANCIAL GROUP, INC.
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Technical analysis trends PRINCIPAL FINANCIAL GROUP, INC.
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 11
Average target price 49,45 $
Last Close Price 52,28 $
Spread / Highest target 5,20%
Spread / Average Target -5,40%
Spread / Lowest Target -23,5%
EPS Revisions
Managers
NameTitle
Daniel Joseph Houston Chairman, President & Chief Executive Officer
Deanna D. Strable-Soethout Chief Financial Officer & Executive Vice President
Kathleen B. Kay Chief Information Officer
Elizabeth E. Tallett Lead Independent Director
Sandra L. Helton Independent Director
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