Market News

Wells Fargo Agrees To Sell Business Unit For $750 million

Wells Fargo & Company has entered into a definitive agreement to sell its Corporate Trust Services (CTS) business to Computershare for $750 million. The transaction is expected to close in 2H 2021.

David Marks, Head of Wells Fargo Commercial Capital (WFC) said, “This transaction is consistent with Wells Fargo’s strategy of focusing on businesses that are core to our consumer and corporate clients.”

Marks further added, “Additionally, we believe that Computershare’s similar approach to service and their emphasis on innovative product development will be valuable to our clients and Corporate Trust Services colleagues in the future.”

The Corporate Trust Services business of Wells Fargo provides a range of trust and agency services related to debt securities issued by government entities, banking and securities industries as well as public and private corporations.

Computershare is the largest Title Custodian service provider in the Canadian Mortgage backed securities industry. Frank Madonna will lead the business integrations. About 2,000 corporate trust Services employees are expected to transfer to Computershare.

Madonna said, “We are excited to welcome these new employees to the computershare family. We know they are interested in the same things we are passionate about: providing excellent customer service, supporting diversity and inclusion efforts, and giving back to local communities.”  (See Well Fargo stock analysis on TipRanks)

This month, Raymond James analyst David Long reiterated a Buy rating on the stock but did not assign it a price target. Commenting after the Raymond James Institutional Investors Conference, Long said, “We see several positive catalysts on the horizon for Wells, including our forecast for pretax, pre-provision income (PTPPI) to have troughed in 4Q; a multiyear expense rationalization initiative already embarked upon; continued removal of consent orders; lower than peer losses in the aftermath of the pandemic driven recession; and the ability to materially increase share repurchases in 2H21.”

Turning to rest of the Street, the stock has a Moderate Buy consensus rating alongside an average analyst price target of $37.80 based on 11 Buys and 7 Holds. Shares have rallied 49.5% over the past year.

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