US Bancorp buys Wachovia corporate trust, custody units
29 November 2005 | 4860 views | 0
Source: US Bancorp
U.S. Bancorp (NYSE:USB) announced today that its lead bank, U.S. Bank, N.A., has entered into a definitive agreement to purchase the corporate trust and institutional custody businesses of Wachovia Corporation (NYSE:WB).
As a result of this transaction, U.S. Bank Corporate Trust Services will acquire approximately 14,100 new client issuances and $410 billion in assets under administration and U.S. Bank Institutional Trust & Custody will acquire approximately 1,700 new clients and $570 billion in assets under administration.
Jerry Grundhofer, chairman and chief executive officer of U.S. Bancorp, noted, "This transaction solidifies U.S. Bank as a top corporate bond trustee and makes us more competitive by increasing our existing scale and leveraging our industry leading technology and operational platforms. It is consistent with U.S. Bancorp's acquisition strategy of purchasing fee-based niche businesses. Further, this transaction illustrates our dedication to expanding the distribution and product offerings in the payments and fiduciary businesses."
This transaction clearly affirms U.S. Bank as a leader in the corporate trust industry - the largest trustee in the area of tax-exempt debt, the second largest in the area of asset-backed and mortgage-backed securities, and the third largest in new corporate bond issuances. The acquisition of the institutional custody business provides U.S. Bank with significant scale and makes U.S. Bank the ninth-largest institutional custody provider.
Under the terms of the agreement, the transaction has a $720 million initial cash purchase price with up to an additional $80 million payable within one year based on business retention levels. The transaction enhances the corporate trust offices in six current locations and adds 19 new corporate trust offices and institutional custody offices primarily in the mid-Atlantic and southeastern states.
With U.S. Bank's history of successful mergers, the company is committed to ensuring a smooth transition. Conversion and integration risks are minimized since U.S. Bank and Wachovia utilize similar technology platforms and employ many of the same key vendors. Following the receipt of regulatory clearances and consummation of the transaction, U.S. Bank is committed to providing its new customers with the same high level of quality services that current U.S. Bank corporate trust and institutional custody customers have come to expect.
"U.S. Bank has a strong, proven track record in this business and will continue to provide outstanding services to our corporate trust and institutional custody clients," said David Carroll, president of Wachovia's Capital Management Group.
U.S. Bank currently has 31 corporate trust offices across the country and offers a complete line of trust services. U.S. Bank serves as trustee and paying agent for the issuance of taxable and non-taxable securities, including the review of documents and indentures, registration, and authentication of bonds, receipts and disbursement of bond sale proceeds, successor trusteeships, escrow account services and transfer and paying agency services. Also, U.S. Bank provides mortgage-backed and asset-backed securitizations, money market paying agency services, bond and tax administration and document custody services.
U.S. Bank currently has 36 institutional trust & custody offices in 24 states focusing on trust and custody services, retirement, investment and health savings accounts for institutional clients. Its product offerings include retirement plans (401(k), profit sharing or money purchase pension plans and defined benefit), institutional trust and custody, master trust services and health savings accounts.