(Bloomberg) -- Wells Fargo & Co. is considering a sale of its minority stake in a Hong Kong lender, as the U.S. bank continues to unload assets as part of a turnaround plan, people with knowledge of the matter said. 

San Francisco-based Wells Fargo has been studying a divestment of a 20% stake in Shanghai Commercial Bank Ltd. that it’s owned for decades, the people said, asking not to be identified because the information is private. The holding, which Wells Fargo considers as non-strategic, could fetch nearly $1 billion, according to the people.

The potential sale would follow a string of disposals by the third-largest U.S. bank by assets as Chief Executive Officer Charlie Scharf seeks to boost Wells Fargo’s profitability. Last year, it agreed to sell its asset management business to a private equity consortium for about $2.1 billion. It’s also unloaded a commercial real estate firm and a retirement plan services unit in recent years. 

Shanghai Commercial Bank is part of a small remaining group of closely held local lenders in Hong Kong, which are seen as valuable gateways to the mainland Chinese market thanks to regulations allowing them to expand their networks across the border. It was incorporated in 1950 and has more than 50 branches in Hong Kong, China, the U.S. and U.K. offering retail products, commercial banking, wealth management and trade finance.

Regulatory Scrutiny

No final decisions have been made, and Wells Fargo could decide to keep its stake for longer, the people said. A representative for Wells Fargo declined to comment, while a spokesperson for Shanghai Commercial Bank didn’t respond to a request for comment. 

Last week, the U.S. Office of the Comptroller of the Currency terminated a 2015 order over add-on products Wells Fargo improperly sold to customers. The bank is still operating under several regulatory orders put in place after revelations that employees set up fake accounts to meet sales goals, including an asset cap from the U.S. Federal Reserve. 

Shanghai Commercial Bank’s net profit for the first half of 2021 rose 13% to HK$1.44 billion ($185 million) as credit impairment losses fell by more than half. Net interest income rose 3.4% to HK$1.86 billion.

The Hong Kong firm traces its roots to a financial group started in the early 20th century by K.P. Chen, an entrepreneur who helped pioneer the modern Chinese banking system. It’s now controlled by a publicly traded Taiwanese lender, Shanghai Commercial & Savings Bank Ltd. Mainland Chinese investment firm Shanghai United International Investment Ltd. also owns a stake, regulatory filings show. 

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