The third-biggest U.S. retail brokerage firm was created Wednesday with the announcement that Wachovia Corp. and Prudential Financial Inc. will combine their retail brokerage forces.

The new company will be the third largest brokerage firm in the country, based on combined client assets of US$537 billion and 2002 estimated combined net revenue of US$4.2 billion.

Under the terms of the agreement, Wachovia and Prudential will combine their retail securities brokerage and clearing operations to form a new firm, which will be headquartered in Richmond, Virginia. Wachovia will have a 62% ownership interest in the new firm, and Prudential will own the remaining 38%. The contributed brokerage operations will continue doing business under their current names until integration is complete, and then will operate as Wachovia Securities.

The Prudential units included in the new firm are: the Private Client Group, which includes Prudential Securities’ domestic and Latin American branches; and Wexford Clearing Services Corporation, as well as all supporting functions for these businesses.

Excluded from the new firm are Prudential Securities’ independent equity research department and its domestic and international equity sales and trading group. These will continue to operate as a unit of Prudential Financial and will be called the Prudential Equity Group. Other Prudential units excluded from the new firm are: Prudential’s international private client and global derivatives operations; and the Prudential Bank and Trust.

The units of Wachovia included in the new firm are: the entire Wachovia Securities retail brokerage firm, including its Private Client Group; its in-bank Investment Services Group and its Independent Brokerage Group, which includes First Clearing Corporation; as well as selected supporting functions.

“We are extremely enthusiastic about the formation of this new financial advisor powerhouse,” said Donald McMullen Jr., president of Wachovia’s Capital Management Group.

“Our two firms are a great fit,” said John Strangfeld, a vice chairman of Prudential Financial, who will serve as chairman of the new combined firm.

http://www.wachovia.com/inside/page/0,,134_307^857,00.html