Looking to build its union pension plan administration business, Amalgamated Bank of New York is in talks to buy 80% of Los Angeles-based First Trade Union Trust Co.
A deal could be completed by the end of the year.
Founded by the labor movement of the 1920s, Amalgamated is a state- chartered bank with $2 billion of assets and is owned by the Union of Needletrades, Industrial, and Textile Employees.
First Trade Union Trust specializes in union pension plan administration. Formerly Guardian Trust Co., it is wholly owned by First Trade Union Bank, a $275.5 million-asset thrift in Boston owned by the Carpenters Combined Benefits Funds of Massachusetts.
Amalgamated Bank already has $10 billion of union pension plan assets under administration, $3.5 billion of which it manages. But it is looking at First Trade Union Trust, which had $2.2 billion of assets under administration Sept. 30, for a boost in fee income.
"We're looking to expand," said Gabriel Caprio, president and chief executive officer of Amalgamated, who confirmed the institutions are holding discussions. "There is a huge concentration of union pension plans out there," he said.
"We don't think we can corner the market on union plans, but we understand and focus on unions. That's what we bring to the table. Then we've got to compete like anybody else," he added.
Mr. Caprio declined to comment on the price of a potential deal as the two companies are still negotiating how to value First Trade's union pension portfolio.
The management of pension plans for unions may not differ from that of corporate or public pensions, but a union affiliation can give a company a marketing niche, according to Daniel J. Wroblewski, president of First Trade Union Trust.
"What makes Amalgamated and First Trade unique is that they are owned by unions, so profits go back into the union community," Mr. Wroblewski said.
"There is a lot of camaraderie being involved with unions and union participants. They like to use union shops. 'Buy American' and so on," he added.
However, Mr. Wroblewski, whose company administers 76 accounts for 13 union clients, declined to comment on the discussions between his parent company and Amalgamated. Both companies primarily administer Taft-Hartley plans, which are pensions that are co-managed by employers and union trustees.
Mr. Caprio, to whom officials of First Trade Union Bank referred all inquiries regarding a potential deal, said he is drawn to the trust company because it is well-situated for expansion.
"On the West Coast, there is a huge concentration of Taft-Hartley plans," he said. "Normally a bank like us wouldn't go to the West Coast, but it's a great opportunity for us."