Ms. Joanna Rotenberg reports
BMO REFOCUSES WEALTH MANAGEMENT BUSINESS FOR NORTH AMERICAN GROWTH, ANNOUNCES SALE OF EMEA ASSET MANAGEMENT BUSINESS
Bank of Montreal has reached a definitive agreement with Ameriprise Financial Inc. to sell the entities that represent its EMEA (Europe, the Middle East and Africa) asset management business. Under terms of the agreement, Ameriprise Financial will purchase BMO's EMEA asset management business for 615 million British pounds or approximately $1,089-million, in an all-cash transaction, subject to regulatory approvals and other customary closing conditions. Separately, in the United States, the transaction includes the opportunity for certain BMO asset management clients to move to Columbia Threadneedle Investments, subject to client consent. The terms of the U.S. agreement were not disclosed.
"This transaction is consistent with BMO's focus on long-term profitability as a leading North American bank and wealth manager, and enables us to focus our resources where we have a competitive advantage and are well positioned to deliver growth and accretive returns," said Joanna Rotenberg, group head, BMO Wealth Management. "We will continue to invest in our diversified North American wealth businesses, including our Canadian asset management business, to provide an unrivalled experience for our clients as their needs change."
Columbia Threadneedle is Ameriprise Financial's global asset management business, overseeing investments for individuals, advisers and wealth managers, as well as institutions. The transaction significantly increases Columbia Threadneedle's EMEA business and brings BMO Global Asset Management's talent and strategic capabilities in EMEA to Columbia Threadneedle that can be leveraged globally, including its expertise in responsible investment, liability-driven investing, fiduciary management, and European real estate and investment trusts.
As part of the transaction, BMO and Columbia Threadneedle will also establish a strategic relationship to offer BMO's North American wealth management clients opportunities to access a wide range of Columbia Threadneedle investment management solutions, including responsible engagement overlay, ESG (environmental, social and governance) and alternatives, upon close.
"Columbia Threadneedle is a global player in asset management and is well positioned to take the businesses to the next level. As clients' needs for asset management shift, scale, new capabilities and distribution reach become even more critical. This transaction is a great outcome for both institutions and for our clients," continued Ms. Rotenberg.
Transaction aligns with BMO's broader strategy to enhance return profile
On a pro forma basis, based on its most recent year-end financials, the impact of the transaction on BMO's efficiency ratio, ROE (return on equity) and common equity Tier 1 (CET1) ratios is an improvement of approximately 64 basis points, 20 basis points and 29 basis points, respectively, supporting BMO's strategic goal to enhance shareholder returns through capital and resource optimization. The transaction will not have a significant impact on future run-rate earnings.
Growing BMO's North American competitive advantage in wealth management
BMO Wealth Management is a key driver of BMO's growth strategy, and today's announcement accelerates opportunities to deepen its advantage in North America. BMO's award-winning Private Wealth franchises in Canada and the United States deliver trusted advice to affluent individuals, families and businesses, through a broad spectrum of financial planning, insurance and advice-based solutions. BMO InvestorLine's highly ranked platform for self-directed investors as well as its cutting-edge digital hybrid advice services adviceDirect and SmartFolio are well positioned for the continued acceleration of on-line investing. BMO is also committed to growing its Canadian asset management business, a recognized leader and innovator in exchange-traded funds, having led the market in net flows for 10 years, with intentions to expand further into the fast-growing alternatives and ESG spaces.
As this transaction met the accounting requirements of assets held for sale under IFRS (international financial reporting standards), the bank will record a net writedown of goodwill related to these businesses of approximately $745-million after tax in Q2 2021, which will be reported in the corporate services segment and treated as an adjusting item. This amount is subject to closing adjustments, including fair values and foreign exchange rates prevailing at the date of closing.
The transaction is expected to close in the fourth quarter of calendar 2021, and both BMO and Columbia Threadneedle are working to achieve a smooth transition.
In connection with the transaction, BMO Capital Markets and Morgan Stanley Canada Ltd. acted as financial advisers and Norton Rose Fulbright LLP acted as legal counsel to BMO. Linklaters LLP acted as legal counsel to Ameriprise Financial.
About Bank of Montreal
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider -- the eighth-largest bank, by assets, in North America. With total assets of $973-billion as of Jan. 31, 2021, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management, and investment banking products and services to more than 12 million customers and conducts business through three operating groups: personal and commercial banking, BMO Wealth Management, and BMO Capital Markets.
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