Wells Fargo - Principal Agrees to Buy Retirement Business
Wells Fargo sold off a number of business units in an effort to better focus on its core banking business. In the latest deal, Principal Financial Group agreed to purchase Wells Fargo’s retirement and trust services business for $1.2 billion. This is a substantial acquisition. This business represents $827 billion in retirement plan assets with 7.5 million participants. This transaction will increase Principal’s footprint in the mid-size market as the majority of Wells Fargo’s plans range from $10 million to $1 billion in assets. In terms of assets, Principal will become the third largest recordkeeper, trailing only Vanguard and Fidelity. It is possible significant layoffs will occur as this transaction is obviously attractive to Principal because of the opportunity to achieve economies of scale. This is part of an ongoing wave of consolidation in the industry that includes a number of significant acquisitions: Empower- JP Morgan, John Hancock - New York Life, and One America - Bank of Montreal.