- Ameriprise Financial to purchase BMO's EMEA asset management
business
- Transaction supports BMO's goals to optimize efficiency and
to focus capital and investment in areas where it has an advantaged
market position, including its North American Wealth Management
business
- BMO Wealth Management to enter into strategic relationship
with Columbia Threadneedle Investments, the global asset management
business of Ameriprise, giving its North American Wealth clients
opportunities to access a wide range of Columbia Threadneedle's
leading investment management solutions
- BMO Capital Markets maintains active international
presence
TORONTO, April 12, 2021 /CNW/ - BMO Financial Group
(TSX: BMO) (NYSE: BMO) announced today that it has reached a
definitive agreement with Ameriprise Financial, Inc. (NYSE: AMP) to
sell the entities that represent its EMEA Asset Management
business. Under terms of the agreement, Ameriprise Financial will
purchase BMO's EMEA asset management business for £615 million or
approximately CAD $1,089 million, in
an all-cash transaction, subject to regulatory approvals, and other
customary closing conditions. Separately, in the U.S. 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,
advisors and wealth managers, as well as institutions. The
transaction significantly increases Columbia Threadneedle's EMEA
business and brings BMO GAM'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, 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 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 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 and common equity Tier 1 (CET1) ratios is an
improvement of approximately 64 bps, 20 bps, and 29 bps,
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 our cutting-edge digital hybrid
advice services adviceDirect and SmartFolio are well positioned for
the continued acceleration of online 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, the bank will record a net write-down 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 Limited acted as financial advisors and
Norton Rose Fulbright LLP acted as legal counsel to BMO. Linklaters
LLP acted as legal counsel to Ameriprise Financial.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly
diversified financial services provider - the 8th largest bank, by
assets, in North America. With
total assets of $973 billion as of
January 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.
Cautionary statement regarding forward-looking
information
Certain statements in this press release are forward-looking
statements under the United States Private Securities Litigation
Reform Act of 1995 (and are made pursuant to the 'safe harbour'
provisions of such Act) and applicable Canadian securities
legislation. These forward-looking statements include, but are not
limited to, statements with respect to the expected closing of the
proposed transaction, the financial impact of the proposed
transaction and are typically identified by words such as
"believe", "expect", "anticipate", "intend", "estimate", "plan",
"will", "should", "may", "could" and other similar expressions.
By their nature, forward-looking statements are based on various
assumptions and are subject to inherent risks and uncertainties. We
caution readers of this press release not to place undue reliance
on our forward-looking statements as the assumptions underlying
such statements may not turn out to be correct and a number of
factors could cause actual future results, conditions, actions or
events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking
statements. Such factors include, but are not limited to: the
possibility that the proposed transaction does not close when
expected or at all because required regulatory approvals and other
conditions to closing are not received or satisfied on a timely
basis or at all; the terms of the proposed transaction may need to
be modified to satisfy such conditions; the anticipated benefits
from the proposed transaction, such as it being accretive to BMO's
efficiency ratio and return on equity and improving BMO's CET1
ratio, are not realized in the time frame anticipated or at all as
a result of changes in general economic and market conditions,
interest and exchange rates, monetary policy, laws and regulations
(including changes to capital requirements) and their enforcement;
reputational risks and the reaction of BMO's customers and
employees to the transaction; diversion of management time on
transaction-related issues; and those other factors set out on page
14 of BMO's 2020 Annual Report. We caution that the foregoing list
is not exhaustive of all possible factors. These factors should be
considered in addition to other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements.
BMO does not undertake to update any forward-looking statement,
whether written or oral, that may be made, from time to time, by
the organization or on its behalf, except as required by law