American financial services provider Wells Fargo is reportedly considering the sale of its asset management business.
The firm’s asset management business offers mutual funds and retirement products and is part of its wealth and investment management division.
As of 30 June, the business managed $578bn on behalf of customers.
However, Wells Fargo intends to retain its wealth management business that provides services to high-net worth clients, people familiar with the matter told Reuters.
The sale of its asset management business could be the bank’s biggest shake-up since Charles Scharf joined Wells Fargo as its CEO last year.
The CEO is aiming to record $10bn savings annually over the long term.
Wells Fargo could raise $3bn from the sale
Wells Fargo could raise $3bn from the sale, the news agency reported, citing one of the sources close to the development.
The bank is reported to have held talks with asset management companies and private equity firms over a potential deal.
The San Francisco-based bank recently reported a 57% drop in its third-quarter profits.
The bank reported a net income of $2bn or $0.42 per diluted common share for the quarter, as compared to $4.6bn or $0.92 per share recorded in last year’s third quarter.
Wells Fargo stated: “The decline in net interest income was due to balance sheet repricing driven by the impact of the lower interest rate environment and balance sheet mix shifts into lower yielding assets including the impact of lower commercial loan balances, as well as higher mortgage-backed securities (MBS) premium amortization.
“These impacts were partially offset by higher variable sources of income and the benefit of one additional day in the quarter.”
In this year’s second quarter, the bank earned a loss of $2.4bn.
