The deal includes UBOC’s proprietary SelectBenefit and certain selected TruSource relationships. Additionally, Prudential will add Union Bank’s proprietary HighMark mutual funds to its investment offerings for retirement plan sponsors and their participants.
According to a UBOC press release, the decision to exit the retirement recordkeeping business was based on analytical data that showed the bank lacked scale in the rapidly consolidating industry, and would be required to make significant investments in technology to enhance products, services and the overall processing environment in its recordkeeping operation to remain competitive and profitable.
Union Bank will continue to offer retirement plan recordkeeping services to clients going forward, but “in partnership with Prudential,’ according to UBOC Executive Vice President Johs Worsoe, head of Global Markets. The bank’s retirement trustee business will not be affected by the change, and Union Bank will remain custodian for certain parts of the business being transitioned to Prudential, according to the firm.
“This was a difficult decision reached after much deliberation, but I’m confident our clients will be well served by Prudential’s strong client focus and solid commitment to the retirement business,’ said UBOC Chief Executive Officer Masaaki Tanaka. “A large number of the employees affected by our decision will either be retained by Prudential or will potentially find positions elsewhere in our company.’
Prudential said the transaction will enable Prudential to build and enhance its relationships with Union Bank’s bankers, who will be able to offer Prudential Retirement products and services to their institutional banking customers. Under terms of the agreement, Prudential will pay $103 million for Union Bank’s book of retirement business, comprising approximately 670 plans, representing nearly 170,000 participants and approximately $8 billion in account values.
The companies expect to close the transaction in the fourth quarter of 2007 and complete the transition of the acquired retirement plans by June 30, 2008. Consummation of the transaction is subject to customary closing conditions, including regulatory approvals.
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