Wachovia to Purchase International Banking Business of Union Bank of California

Wachovia Corp and UnionBanCal Corporation today announced that they have entered into an agreement under which Wachovia will acquire the international correspondent banking business of Union Bank of California, N.A. Union Bank of California is wholly owned by UnionBanCal.

Through this transaction, Wachovia will integrate Union Bank’s sizeable international correspondent franchise, including 600 bank relationships, the payment and trade processing activity which drives these relationships, and the related loan book in an amount up to $2 billion. Union Bank has been an important player in international correspondent banking for decades with a strong focus on the high-growth Asian market, where the bank established its first overseas representative office more than 40 years ago.

As part of the transaction, a number of Union Bank’s senior leaders, relationship managers and customer service and operations specialists will join Wachovia’s international team. Following completion of the transaction, the combined network will expand Wachovia’s coverage to include New Delhi, Chennai and Hanoi, cities where Wachovia is active but not currently represented. Wachovia will also gain Union Bank’s more expansive menu of Yen- denominated transaction processing and credit services.

“We have great respect for Union Bank of California’s business and strong team. They’ve always listened to their customers, offered innovative services and, like us, acted as partners rather than competitors to their correspondents. By any relevant measure, we believe the fit between our two organizations is near-perfect; and it reinforces our strategic commitment to the global financial institutions market,” said Michael Heavener, executive vice president and head of Wachovia’s international unit. The transaction is consistent with Wachovia’s publicly stated acquisition criteria.

“This transaction will benefit both our clients and our shareholders,” said Philip B. Flynn, vice chairman and chief operating officer of Union Bank. “Our clients will benefit from Wachovia’s excellent product set, high quality service and superior scale. Our shareholders will benefit from increased management focus on Union Bank’s core businesses and the redeployment of the transaction proceeds into other growth opportunities.

“The decision to exit international banking followed an assessment of Union Bank’s ability to compete in a changing landscape. Given the additional amount of resources that would have been required to grow the business and remain competitive in the current regulatory environment, we concluded that the business would be more valuable to another leader in the international correspondent banking industry,” Flynn added.

Wachovia has been committed to the international correspondent and trade business for more than a century, a strategy shared by several of Wachovia’s predecessor institutions. Wachovia offers an array of payment, trade, deposit and credit services to more than 3,000 international and domestic banks. Wachovia and its affiliates also serve 1,500 of Wachovia’s commercial and large corporate clients with trade services, including a Cyber Suite of Web- based, letter-of-credit and supply chain management tools.

Under the terms of the sale, Wachovia will pay Union Bank a base purchase price of $245 million in cash at closing. The purchase price is subject to a potential downward adjustment not to exceed $45 million based on business retention between signing and closing, and Union Bank of California is entitled to a potential contingent payment of up to $45 million based on the success of the conversion of Union Bank’s customer base to Wachovia for international correspondent and trade business services.

The consummation of the transaction is subject to the satisfaction of customary closing conditions and is expected to occur in October 2005. The operations of certain of the non-U.S. offices relating to the international correspondent and trade business may transfer to Wachovia after the initial closing, subject to the receipt of any required foreign regulatory approvals.

Merrill Lynch served as advisor to Union Bank of California, and Wachovia Securities advised Wachovia.