A Southeastern banking giant is expanding its defined contribution retirement plan recordkeeping business.
Wachovia Corp., Charlotte, N.C., has agreed to buy a recordkeeping unit from Ameriprise Financial Inc., Minneapolis, for a price that was not disclosed.
Ameriprise predicts it will generate a “modest gain” on the sale.
The deal is subject to approval by federal antitrust regulators. Ameriprise and Wachovia hope to complete it by June 30, the companies say.
Ameriprise has been providing recordkeeping and plan administration services for 225 defined contribution plans with about 700,000 participants and $28 billion in assets.
Ameriprise Chairman Jim Cracchiolo says it is selling because the recordkeeping business is a scale-driven business, and Ameriprise would prefer to focus on personal financial advisory, asset accumulation, income and protection services.
Ameriprise units will continue to sell investment management products and services, financial education services and individual retirement account rollover services to defined contribution plans and participants, Ameriprise says.
Wachovia, which will emerge from the deal with $69 billion in defined contribution assets, will sell Ameriprise funds through its own defined contribution plan program, Ameriprise says.
Ameriprise sells its mutual funds under the RiverSource brand name.
Ward Armstrong, chairman of the Ameriprise Trust Company unit, says Ameriprise chose Wachovia as a buyer partly because Wachovia has operations in a nearby community, Bloomington, Minn., and because it operates on the same core recordkeeping system.