Retirement giant TIAA to exit banking

TIAA in New York is selling its bank unit to a group of investors as part of a broader strategic plan under new leadership to refocus on the company's core retirement and asset management businesses.

The privately held retirement giant said Thursday that the investors — which include funds managed by Stone Point Capital, Warburg Pincus, Reverence Capital Partners, Sixth Street and Bayview Asset Management — will each own noncontrolling interests in TIAA Bank. The parties did not disclose the financial terms of the planned sale.

Under the terms of the deal, which is expected to close in 2023, nearly all the $38.6 billion-asset bank's current assets and business lines will be acquired by the new ownership.

Adobe Stock

The notable exception is TIAA Trust, which "is closely aligned with the wealth business that complements TIAA's retirement organization and mission," the company said in a press release. TIAA said that it will apply for a new, separate national trust bank charter, and the trust business will become a subsidiary of TIAA.

TIAA spokesman Michael Cosgrove told American Banker that, under new leadership, the company "really took a hard look at the go-forward strategy" over the past year and determined that "it was best to focus on the core retirement business."

Thasunda Brown Duckett, a veteran of JPMorgan Chase, took the reins at TIAA in May 2021. She had been the CEO of Chase Consumer Banking for nearly five years, leading a business unit with nearly 5,000 branches.

Cosgrove said that TIAA "made the decision from a position of financial strength," noting that its Jacksonville, Florida-based bank generated record earnings in the final quarter of 2021 and each of the first two quarters of this year. The bank has not yet finalized its third-quarter results, he said. As a private company, he noted, TIAA does not report details publicly.

Most Powerful Women in Banking 2022

Most Powerful Women in Finance: No. 3, Thasunda Brown Duckett, TIAA

October 5, 2022 7:46 AM

"The bank is doing very well," Cosgrove said. He said TIAA will retain a noncontrolling ownership stake in the bank.

The company said TIAA Bank will remain headquartered in Jacksonville, but it will operate under a new name after the deal closes. TIAA reached a deal to acquire EverBank in Jacksonville in 2016 for $2.5 billion. At that time, the acquired bank was merged with TIAA's smaller bank subsidiary and renamed.

TIAA and the bank's new ownership said in the press release they expect no changes to the bank's products and services. The transaction will also have no impact on TIAA retirement accounts, they added.