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Rating:For $25MM, T. Rowe Kisses a Biz Goodbye Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, May 30, 2013

For $25MM, T. Rowe Kisses a Biz Goodbye

Reported by Neil Anderson, Managing Editor

T. Rowe Price [profile] is getting out of the savings bank business.

On May 23 the Baltimore-based mutual fund shop signed a deal to sell 100 percent of T. Rowe Price Savings Bank to former Republic National Bank of New York executive Jacob Safra for $24.0 million in cash [SEC filing]. According to a customer notice posted on T. Rowe's website (see below), the mutual fund shop is selling the bank in advance of new bank regulations.

"We anticipate that new regulations designed for banks, which would apply to T. Rowe Price due to our ownership of the bank, would significantly impact our ability to manage key aspects of our core investment management business," the notice reads.

Pending regulatory approval, the T. Rowe team expects the deal to close in the fourth quarter. T. Rowe first launched the business in 2000.


Customer Notice


Important Announcement

T. Rowe Price Has Entered Into an Agreement to Sell T. Rowe Price Savings Bank

May 29, 2013

After careful analysis, T. Rowe Price has decided to sell our savings bank. Please be assured that deposits are, and will remain, FDIC insured to the fullest extent allowed. Further information about the sale is below, but we want you to know that the bank is open for business and will continue to open new accounts and provide the same high-level of service to clients.

T. Rowe Price is first and foremost an investment management company, committed to helping our clients achieve their financial goals with investment products and services. We opened T. Rowe Price Savings Bank in 2000 as an additional service to our clients. However, we anticipate that new regulations designed for banks, which would apply to T. Rowe Price due to our ownership of the bank, would significantly impact our ability to manage key aspects of our core investment management business. As a result, and after careful study and deliberation, we came to the decision to sell the bank. Please note that these regulatory issues are not expected to affect clients of the bank directly.

After evaluating the options available to us, we have entered into an agreement to sell the bank to Mr. Jacob M. Safra. Mr. Safra is a veteran banker, financier, and investor who has spent his entire professional career in the financial services industry. His background can be found below. We are working closely with Mr. Safra to help ensure that this transition will be handled seamlessly for our clients, and that they will receive the same level of service and care that they expect from T. Rowe Price. Also, bank clients do not have to take any action as a result of a change in the bank's ownership.

We have ensured that two special features will be made available to clients, as part of the agreement of the sale:
  • For 180 days following the closing date of the sale of the bank, clients may close their CD account without an early withdrawal penalty from the bank and they will receive accrued interest until the date of withdrawal.
  • From the closing date of the sale of the bank until the next maturity date of their CD account, clients will receive a 10% increase in the interest rate that is in effect for their account on the closing date, subject to a minimum increase of at least 0.01% and a maximum increase of 0.25%.

    Also, under the new ownership, we are pleased that the bank—which is anticipated to change its name to M.Y. Safra Bank, FSB—will have a broader suite of banking products available to clients. The sale is contingent upon approval by the Office of the Comptroller of the Currency (OCC), a division of the U.S. Department of the Treasury, and we expect the sale to be completed by the end of the year. We will continue to keep you informed as additional information is available. Should you have any questions, please feel free to call us at 1-800-445-8881 or visit us at www.troweprice.com/bankingservices.

    Mr. Jacob M. Safra's Background:
    Mr. Safra is a banker, financier and investor who has spent his entire professional career in the financial services industry. During the 1990's, Mr. Safra was an officer of Republic National Bank of New York, which at the time was a large international bank headquartered in New York City. Initially, Mr. Safra worked extensively in Republic's treasury department where he focused on asset liability management. He then served in a variety of managerial capacities and, ultimately, co-headed Republic's global risk assessment department. Mr. Safra also engaged in substantial contact with high-net worth clients of the bank. In addition, he focused on serving international customers during his posting to the bank's Hong Kong branch. Mr. Safra served as an officer of Republic until shortly before its sale to HSBC in 1999.

    Subsequently, Mr. Safra founded M. Safra & Co., Inc. and SPNY Capital LP, private investment management firms in New York City, which he currently manages. He is also actively involved in various philanthropic activities in New York City and elsewhere.

    Mr. Safra graduated magna cum laude from Harvard College and is also a graduate of Harvard Business School. He resides in New York City with his wife and two sons. Mr. Safra is a member of the renowned Safra banking family, which has built a reputation for safety and conservative banking practices.
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