Trust continues to downsize business due to asset management business sale agreement

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Scott McIntyre/Bloomberg

Trust Financial plans to sell its asset management subsidiary, the latest step in the super regional bank’s efforts to reorganize and simplify its operations.

Charlotte, North Carolina-based Trust Co. confirmed Friday that it has reached an agreement to sell Sterling Capital Management to Toronto’s Guardian Capital Group for $70 million plus future payment incentives.

The transaction announcement came a day after Trust reported: Large-scale insurance brokerage business is close to exit. A sale of Trust Insurance Holdings has long been rumored.

The Guardian said in a press release that Sterling Capital, which had $76 billion in assets under management at the end of December, will operate as an independent entity and will continue to be led by its current management team. The transaction is expected to close in the second quarter.

“This advancement is a win-win for Starling Capital, Guardian, and Trustust,” Sterling Capital CEO Scott Hemme said in a release.

“This will enable Starling Capital to grow as an independently managed investment management firm poised for continued long-term growth under Guardian’s strategic oversight,” Heni said. He added that Sterling Capital will “partner with Trust on common relationships and opportunities.”

Trust has been in restructuring mode for several months. Aiming to become a simpler, more profitable company.

as part of $750 million cost reduction program announced last fall, the company reduced its workforce by 4%, consolidated multiple business lines and created a single company-wide payments group. Also, Reduced the size of the board of directors and Expanded the executive management teamand Plans to close 4% of branches in March.

Trust is also reviewing its balance sheet. last summer, Sold a $5 billion student loan portfolio.

In response to a request for comment on the sale of Sterling Capital, which Trust inherited from its predecessor BB&T, a Trust spokesperson said in an email Friday that the company “regularly evaluates opportunities and makes adjustments.” “There is,” he said. [its] This is a business that invests in growth areas. ”

Sterling Capital was founded in 1970 as Nisbet and changed its name to Sterling Capital Management in 2001, according to its website. According to the website, BB&T merged with SunTrust Bank in 2019 to form Trust, Inc., and acquired a majority stake in 2005.

Questions remain about whether and when the $540 billion trust will sell all or part of its 80% stake in Trust Insurance Holdings.

On Thursday, industry publication Insurance Insider reported that Trust was close to an agreement to sell the division to Stone Point Capital, a private equity firm in Greenwich, Conn., and Clayton Dubilier & Rice, a New York City private equity firm. It was reported that

Stone Point acquires 20% of Truist’s insurance business Spring 2023 — one of several deals made last year. The bank took down the insurance unit This comes at a time when insurance valuations are soaring and banks are having to shrink their balance sheets.

A Trust spokeswoman on Friday declined to comment on reports that the company was close to selling its insurance brokerage division.

One analyst noted Friday that the sale of Sterling Capital is much smaller than the potential sale of Trust Insurance Holdings.

“Compared to that deal, which was reportedly worth an estimated $15 billion, today’s deal is a bit of a sideshow,” Piper Sandler analyst Scott Schieffers said in a research note.

Trust executives have said multiple times that their 80% stake in Trust Insurance Holdings gives them the flexibility to generate more capital.

During the company’s fourth-quarter earnings call last month, CEO Bill Rogers said, “We are constantly evaluating alternatives and have made it clear that we will do what is best for our insurance business and Trust.” I’ve come,” he said. from now on. “

“It has to do with specific timing… so I don’t really think it should be commented on,” he added.