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U.S. Bancorp (USB) Signs Acquisition Deal With MUFG Union Bank

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Zacks Equity Research
·3 min read
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As part of its efforts to increase presence on the West Coast, U.S. Bancorp USB recently agreed to acquire the debt servicing and securities custody services client portfolio of MUFG Union Bank, N.A. Closing of the deal, expected in first-quarter 2021, is subject to regulatory approval and customary closing conditions.

While the financial terms of the deal have not been disclosed yet, U.S. Bancorp will likely acquire 600 client relationships, and assets under custody and administration worth $320 billion.

Notably, being the parent company of U.S. Bank — the fifth-largest commercial bank in the United States — U.S. Bancorp had 70,000 employees and $540 billion in assets as of Sep 30, 2020.

The vice chair of U.S. Bancorp’s Wealth Management and Investment Services segment, Gunjan Kedia, stated, “This transaction is a great fit for U.S. Bank. U.S. Bank is known for working with clients one-on-one to understand their unique requirements and deliver customized, proactive solutions that help them meet their objectives. We look forward to putting the resources of U.S. Bank to work for our new clients and providing an exemplary client experience.”

Through the Wealth Management and Investment Services division, the company provides private banking, trust, custody, retail brokerage services, insurance, trust, custody, investment management, and related financial advisory services to individuals and institutional investors.

Ranjana Clark, the head of Global & Americas Transaction Banking for MUFG Union Bank, stated, “After a thorough analysis of our market position in the Debt Servicing and Securities Custody product areas, we made the decision to sell these products and services within our Transaction Banking portfolio, which will enable us to reinvest capital in other strategic areas of focus to the benefit of our clients and MUFG Union Bank. For those client relationships that are being acquired, we are confident that U.S. Bank will deliver high-quality service and support.”

Our Take

U.S. Bancorp’s several bank acquisitions over the past years have opened new markets to it and fortified existing markets. Its inorganic growth efforts combined with ongoing investments in innovative product enhancements, services and people have strengthened its balance sheet and fee-based businesses beside increasing market share.

Over the past six months, shares of the company have gained 38.1%, outperforming 30.4% growth recorded by the industry.

Currently, U.S. Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acquisitions by Other U.S. Banks

Recently, in order to strengthen its private bank and wealth management offerings, SVB Financial Group SIVB inked a stock-cum-cash deal to acquire Boston Private Financial Holdings, Inc. BPFH.

Also, JPMorgan JPM acquired the Global Loyalty division of cxLoyalty Group Holdings, which is anticipated to accelerate its solid foundation built in loyalty, including JPMorgan’s Ultimate Rewards platform.

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