Yesterday, Regions Bank, a subsidiary of Regions Financial Corp. (RF) entered into an agreement with Western Union Co. (WU), a leader in global payment services, to enhance services offered to its customers. Under the terms of the deal, Regions will provide Western Union global money transfer services and faster bill payment services across its 1,700 locations in the U.S.
In today’s world, consumers expect flexible, expedient and trustworthy financial services providers. The transaction with Western Union will aid Regions in offering a broader suite of products and services to its customers and communities in accordance to their needs.
The agreement will facilitate Regions’ account holders in sending and receiving domestic and international money transfers and in making daily payments more conveniently and easily through Western Union’s network. The service will also be available to walk-in customers, who do not have their accounts at Regions.
Moreover, the services are anticipated to be available in the second half of 2011 at Regions' branches in 16 states. The bank also plans to offer these services to Regions’ online customers.
On the other hand, the contract will expand Western Union’s global money movement network by providing consumers more ways to transfer money promptly to more destinations worldwide.
Through this transaction with Regions — a full-service provider of consumer and commercial banking, trust, securities brokerage, mortgage and insurance products and services — Western Union will be more focused on developing the best-in-class services and expanding the company's business to new consumer segments through Regions’ retail locations as well as through online channels.
Consistent with its strategic initiatives, Regions is exploring opportunities. Last week, Regions announced the merger of its three units into a single wealth management group. The formation of a new group will aid in diversifying its revenue streams.
The bank pooled its trust, insurance and private banking units into one group, which would look after affluent clients. The combined unit will help in gaining profitable customers, which in turn, will raise fee income.
The new business line will facilitate Regions in advancing its strategic plan by focusing on the main and profitable customer segment. The company aims at increasing non-interest revenues and creating strong customer relationships while providing greater value to them.
Regions is also contemplating strategic options for the part-sale of its Morgan Keegan & Co. brokerage unit as it came under the Securities and Exchange Commission's (SEC) investigation. The company does not plan to sell Morgan Keegan's asset management and trust businesses. Regions has hired Goldman Sachs Group Inc. (GS) to explore alternatives for its Morgan Keegan unit.
Since 2007, Regions has been posting annual losses but recorded profits in the last two quarters, and is yet to receive regulatory approval to repay $3.5 billion of government bailout money. According to The Wall Street Journal, Regions is putting Morgan Keegan on the block to raise capital and repay its dues to the government.
Regions currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. Moreover, considering the fundamentals, we maintain a long-term Neutral recommendation on the stock.
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REGIONS FINL CP (RF): Free Stock Analysis Report
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