Wachovia to Sell Corporate Trust and Institutional Custody Units to U.S. Bank for $720 Million

Strategic Insights -

Wachovia Corp. has entered into a definitive agreement to sell its Corporate Trust, Institutional Custody, Document Custody, and Structured Finance Trust Service units to U.S. Bank, N.A., the lead bank of U.S. Bancorp. The transaction is expected to close in the fourth quarter of 2005 and will generate a fourth-quarter net pre-tax gain of approximately $425 million to $450 million, or $185 million to $200 million after-tax. Wachovia's Capital Management Group (CMG) will focus on its three core businesses: retail brokerage, asset management, and retirement.

Key Takeaways:

  • Wachovia expects the transaction to close in the fourth quarter of 2005, with an initial sale price of $720 million.
  • The transaction will reduce goodwill and other intangibles by approximately $205 million.
  • Wachovia may realize up to $80 million pre-tax, or $50 million after-tax, depending on the level of business retained during the 12-month period following the completion of the transaction.
  • Wachovia's Corporate and Investment Bank served as the company's exclusive financial advisor in connection with this transaction.
  • Wachovia Corporate and Institutional Trust offers a range of services, including custodial services, securities lending, institutional clearing services, investment management, and more to institutional clients worldwide.
  • Wachovia Corporation is one of the largest providers of financial services to retail, brokerage, and corporate customers.

Statistics:

  • Wachovia had assets of $532.4 billion, market capitalization of $73.9 billion, and stockholders' equity of $46.8 billion at September 30, 2005.
  • Wachovia has 13 million household and business relationships spread across 15 states and Washington, D.C., with 3,138 offices.
  • Wachovia Securities, LLC, the company's full-service retail brokerage firm, serves clients through 702 offices in 49 states and five Latin American countries.
  • Wachovia's Corporate and Investment Bank serves clients in selected industries nationwide, with global services offered through 40 offices around the world.

Sources:

  • Wachovia Corp. press release dated November 29, 2005.
  • Company website: http://www.wachovia.com/