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Boston Private Financial Holdings is shedding another of its wealth management divisions to refocus on its own personal wealth management brand and is also preparing for significant layoffs.
The company announced yesterday that it will sell its ownership stake in San Francisco-based Bingham, Osborn & Scarborough, a transaction that will result in BOS becoming majority owned by members of its management team and New York-based Kudu Investment Management acquiring a minority interest.
Boston Private will receive approximately $21 million in cash at closing and an eight year revenue share. The bank currently estimates the transaction will result in a pre-tax gain of approximately $18 million and a related tax expense of approximately $3 million to $4 million. The net financial impact will increase tier 1 common equity by approximately $33 million.
“This transaction generates capital flexibility for us to redeploy into our Boston Private franchise, while enabling return of capital to shareholders,” Clayton G. Deutsch, CEO of Boston Private, said in a statement. “We are excited about opportunities to invest more directly in expansion of our Boston Private Wealth Management, Trust, and Private Banking businesses.”
The sale of its stake in BOS is the second such move Boston Private has made within the last year. In December 2017, Boston Private sold its entire ownership stake in Boston-based Anchor Capital Advisors, one of its wealth management subsidiaries that manages over $9 billion in assets, also in an effort to refocus its business on the Boston Private brand of wealth management.
Boston Private’s wealth division has had an interesting ride over the past several years, with quarters characterized by negative net flows. Lately, though, the wealth division has been making a turnaround with several positive quarters.
BOS had approximately $4.7 billion of assets under management as of Sept. 30, 2018 and accounted for approximately $17.4 million of revenue in Boston Private’s Wealth Advisory segment.
