By the end of 2019, Charles Schwab will own more than $10 billion in shares in some of the world’s biggest financial institutions, including Wells Fargo, Goldman Sachs and Morgan Stanley.
The stock has been valued at $25 billion, the company said in a filing with the US Securities and Exchange Commission (SEC).
Schwab said the deal with Wells Fargo was expected to close this year, but did not specify when.
The US-based bank, which has about $1.6 trillion in assets under management, has been under pressure over the past few years from investors and regulators over its treatment of customers.
It has also been criticized for not taking steps to prevent customers from using its services to defraud others.
Last year, the US Department of Justice launched a criminal probe into the bank after receiving a whistleblower complaint about a $5 million settlement it paid to settle claims that its mortgage servicing services led to the foreclosure of more than 300,000 mortgages, including some that were foreclosed on for years.
The company also faces criticism for failing to pay $6 billion to settle allegations that it misled borrowers about the risks of its products.
Last week, the SEC approved a settlement with JPMorgan Chase to resolve a lawsuit by some customers who say the bank misled them into taking out mortgages backed by the bank’s mortgage-backed securities, or MBS.
The bank agreed to pay about $3.3 billion to resolve allegations that the bank was misleading customers about the extent of the risks posed by the securities.
The Wells Fargo deal is the largest in history and follows an agreement between the bank and the US Justice Department in 2014.
A Wells Fargo spokeswoman said the bank had been “in discussions” with Schwab about the deal, and had not yet been formally presented with the offer.
The bank will have a new chairman in 2019, the spokeswoman said.
“It’s a new and exciting time at the bank.
We’re thrilled to be able to join forces with Charles Schwabs,” she said.
“It is a terrific opportunity for us to continue to grow our business and be the trusted home for our customers.”
Schwabs, whose holdings include Goldman Sachs, Citigroup and Morgan Chase, has a strong presence in the US market and accounts for almost half of its assets.
The deal with Schwabs will help the bank grow its presence in a market that is expected to account for nearly a third of its annual sales by 2020, according to research firm Euromonitor International.
“This is the biggest deal we’ve done in a long time.
The Schwab portfolio is now so large that it’s more than 10 times the size of the average individual investor portfolio, so the opportunity to leverage that into a huge investment is tremendous,” said Dan Siegel, director of portfolio management at Renaissance Capital.
Schwaws will have an equal stake in the investment firm.
Schwabis assets will be held by the company’s investment arm.
He will continue to lead the company as the chief investment officer.
Shares in Schwab are up around 40 percent so far this year.