Wells Fargo (WFC -2.58%) has announced the sale of its private student-loan portfolio in the first of what could be several divestitures for the bank in the coming months.
The bank did not disclose financial terms of the sale or even the names of the buyers. But Bloomberg, citing anonymous sources, reported that the private equity firms Apollo Global Management (APO) and Blackstone (BX) are the buyers.
Once sold, the portfolio will continue to be serviced by Firstmark, a division of the student loan company Nelnet (NNI -0.73%). The balance of Wells Fargo's private student-loan portfolio is about $10 billion, and the portfolio has an average FICO score of 768, according to Bloomberg.
The sale of the student loan portfolio makes good on a promise by CEO Charlie Scharf to exit businesses that aren't core to Wells Fargo's strategy.
Ultimately, the bank is planning to cut annual expenses by about $10 billion, although the time frame of these cuts is still unknown.
New student loan applications from existing private student-loan customers will still be accepted at the bank until Jan. 28, 2021. The transaction is expected to close in the first half of 2021.