A Wells Fargo branch in New York. (Photo: Bloomberg)

Wells Fargo is reportedly in talks to sell its retirement-plan services business to Principal Financial Group for as much as $1 billion or more.

The move comes as Wells Fargo tries to trim its operations to cope with the Federal Reserve-imposed cap it has on asset growth as a result of its fake-accounts scandals.

According to a Reuters report on Sunday citing unnamed sources, the bank's retirement plan services unit — which includes a 401(k) business — could be merged with that of the insurer and financial services company. Such a deal could be reached later this month, the report says, though neither firm addressed the matter over the weekend.

On Monday, though, Wells Fargo said it “does not comment on market rumors or speculation and continues to serve retirement clients each day.”

While Wells Fargo is based in San Francisco, its wealth operations are headquartered in St. Louis. Principal Financial has its home in Des Moines, Iowa.

The news comes several months after the embattled bank sold 52 branches in the Midwest to Flagstar Bancorp. Also last year, Wells Fargo got rid of its Puerto Rico auto-loan business for about $1.7 billion.

Latest Quarter

In the fourth quarter of 2018, Wells Fargo's net income fell about 1.5% to $6.06 billion, or $1.21 per share, vs. $6.15 billion, or $1.16 per share, a year ago. Revenue dropped 5% to $21 billion.

As of Dec. 30, Wells Fargo has 13,968 advisors, down nearly 600 from a year ago and more than 100 from the prior quarter. Since the bank's fake-accounts scandal erupted in fall 2016, when it had 15,086 registered reps, the bank's wealth unit has lost 1,118 advisors.

Total assets also are declining. They stand at $1.7 trillion, down 10% from last year due to lower market valuations and net outflows, the bank says.

The unit's net income was $689 million for the quarter, though, which is up 2% from the year-ago period but down 6% from the third quarter. Average loan balances of $75 billion, however, rose 3% from last year.

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Wells Fargo said to be selling retirement plan business to Principal Financial

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