Schwab seals $1.8bn deal for USAA’s wealth management business

Charles Schwab is to acquire the assets of USAA’s wealth management business, including brokerage and managed portfolio accounts, for $1.8 billion in cash.

The deal will give Schwab an additional $90 billion in assets and one million new client accounts, the firm said in a statement. Schwab, a discount brokerage firm, an investment manager and a custodian for RIAs, had around $3.7 trillion in total client assets as of the end of June.

The transaction has been approved by the boards of both companies and is expected to close during 2020, subject to customary regulatory approvals and conditions, Schwab said. The conversion of USAA’s brokerage services and managed portfolio accounts to Schwab’s platform will occur at the close of the transaction.

Both companies agreed to a long-term referral agreement, effective at closing of the acquisition, that would make Schwab the exclusive wealth management and brokerage provider for USAA members.

Shares of Schwab had slipped about 0.5% in premarket to $43.90 a share on Friday at around 10.30 am. 

The Wall Street Journal first reported that the two firms were in talks over a $2 billion deal on July 15.

USAA is a San Antonio, Texas-based financial services firm, which also operates insurance and banking businesses, that focuses on serving current and former members of the US military. USAA sold its asset management business to Victory Capital for $850 million in November of 2018.

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