clock menu more-arrow no yes

Filed under:

Wachovia selling units to Bancorp

CHARLOTTE, N.C. — Wachovia Corp. is selling its corporate trust, institutional and document custody, and structured finance trust-service units to U.S. Bancorp for $720 million in cash, the bank said Tuesday.

The deal still requires regulatory approval and is expected to close by the end of the fourth quarter, according to Wachovia, the nation's fourth-largest bank.

The sale resulted from the decision to focus on three core businesses in its capital management group — retail brokerage, asset management and retirement, David Carroll, president of the group, said in a statement.

US Bancorp, based in Minneapolis, said the transaction will enhance its corporate trust offices in six locations and adds 19 corporate trust and institutional custody offices mostly in the mid-Atlantic and Southeast.

The deal should generate a gain of $185 million to $200 million in the fourth quarter and reduce goodwill and other intangibles by about $205 million, Wachovia said.

Wachovia said it expects the deal to be "relatively neutral" to earnings per share in 2006. Analysts expect the bank to earn $1.11 a share in the fourth quarter of 2005 and $4.72 per share in fiscal 2006, according to a Thomson Financial survey.

US Bancorp said its US Bank corporate trust services will acquire about $410 billion in assets and 14,100 new clients, while an additional $570 billion in assets and 1,700 new clients will be rolled into its institutional trust and custody division.

The acquisition is in line with the company's strategy of buying fee-based niche businesses and would make the bank a top corporate bond trustee, US Bancorp Chairman and Chief Executive Jerry Grundhofer said in a statement.