Wells Fargo plans to sell its asset management business for over $3 billion after posting 57% drop in 3rd-quarter profit, report says

• Wells Fargo plans to sell its asset management business for $3 billion after posting a 57% drop in third-quarter profits, according to Reuters.
• The bank's wealth management arm, which caters to high-net worth clients, would remain part of the business.
• The US bank has held talks with potential asset management companies and private equity firms, but no deal has been confirmed yet.
• Wells Fargo's third-quarter profits dropped to about $2 billion, from $4 billion a year ago, as it signaled that it was prepared for a wave of soured loans.

Wells Fargo is exploring a sale of its asset management business after posting a 57% drop in third-quarter profits, Reuters reported on Thursday.

The US bank's asset management arm, which manages $578 billion, could fetch over $3 billion, Reuters said, citing sources.

A potential deal would mark CEO Charles Scharf's first overhaul of the bank since he joined from BNY Mellon last year, as he seeks to transform the firm by cutting costs and saving $10 billion annually.

Wells Fargo has held talks with potential asset management companies and private equity firms, but no deal is confirmed yet, Reuters said. A spokesperson declined to comment to Business Insider's request for comment.

Meanwhile, the wealth management business, which caters to high-net worth clients, would still be part of the bank.

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While the Federal Reserve has held interest rates at historically low levels in response to COVID-19, Wells Fargo saw a 19% decline in net interest income to about $9 billion in the third-quarter.

"The trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums," Scharf said in a statement.

Profits dropped 57% to about $2 billion, from $4.6 billion a year ago, as the bank indicated that it was prepared for a wave of soured loans. But the results were still better than the second-quarter, during the depths of the pandemic, when the bank lost $2 billion as it set aside provisions for bad loans.

The Federal Reserve had placed restrictions on Wells Fargo's balance sheet following a fake account scandal in which the firm created millions of accounts for customers without their permission.

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