April 22, 2019 01:00 AM
Wells Fargo exec: Sale of asset management unit not in the cards
Jonathan G. Weiss, senior executive vice president and head of the wealth and investment management division, which includes Wells Fargo Asset Management, said "there's a lot of reasons that we like the business and we're not looking to sell it."
"We think it has scale. We think it has synergies with the rest of our wealth businesses," Mr. Weiss added. "It's an intellectual capital business, and we like that. It's profitable."
According to Mr. Weiss, while the firm has done a lot of work to make WFAM more integrated over the past couple of years, it also sees room for future growth by attracting new talent and adding investment strategies to its lineup.
As of March 31, San Francisco-based WFAM reported $476 billion in assets under management, down 4% from the previous year, primarily due to equity and fixed-income net outflows and the sale of WFAM's ownership stake in The Rock Creek Group, the firm's first-quarter earnings release said.
Asset cap
Another reason the asset management unit is seen as a boon to the company is because the unit is "free to grow the business in a thoughtful, disciplined way," Mr. Weiss said.
In February 2018, the Federal Reserve placed a growth restriction on Wells Fargo in light of the retail banking cross-selling scandal. The asset cap remains in place, prohibiting Wells Fargo from growing beyond $1.95 trillion in assets.
"It's not especially constrained by the asset cap — and it's in fact one of the reasons we like the (asset management) business, because we can grow assets under management in an off-balance-sheet manner," Mr. Weiss said.
The former CEO of Wells Fargo Asset Management, Kristi Mitchem, told Pensions & Investments in July 2017 that the retail banking sales scandal resulted in the loss of a few clients at WFAM but had a bigger impact on prospective institutional clients.
"I do believe the impact on the asset manager has been very limited," said Ms. Mitchem at the time. "But if you're asking me where we have felt it, it's not with existing clients — it's with prospects."