Wells Fargo

Wells Fargo & Company (NYSE: WFC) is an American multinational diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the U.S. by assets and the largest bank by market capitalization.^[4] Wells Fargo is the second largest bank in deposits, home mortgage servicing, and debit card. In 2011, Wells Fargo was the 23rd largest company in the United States.^[2]

In 2007 it was the only bank in the United States to be rated AAA by S&P,^[5] though its rating has since been lowered to AA-^[6] in light of the financial crisis of 2007–2011. The firm's primary U.S. operating subsidiary is national bank Wells Fargo Bank, N.A., which designates its main office as Sioux Falls, South Dakota.

Wells Fargo in its present form is a result of an acquisition of California-based Wells Fargo & Company by Minneapolis-based Norwest Corporation in 1998 and the subsequent 2008 acquisition of Charlotte, NC-based Wachovia. Although Norwest was technically the surviving entity in the 1998 merger, the new company renamed itself Wells Fargo, capitalizing on the 150-year history of the nationally recognized name and its trademark stagecoach. Following the acquisition, the company transferred its headquarters to Wells Fargo's headquarters in San Francisco and merged its operating subsidiary with Wells Fargo's operating subsidiary in Sioux Falls.

In 2011, Wells Fargo had more than 9,000 retail branches (called stores by Wells Fargo), 12,231 automated teller machines, 270,000 employees (called team members) and over 70 million customers.

Wells Fargo is one of the Big Four banks of the United States with Bank of America, Citigroup and JP Morgan Chase.^{[7][8][9][10][11][12][13]}

Lines of business

Wells Fargo offers a range of financial services in over 80 different business lines.^[14] Wells Fargo delineates three different business segments when reporting results: Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement.

Community banking

The Community Banking segment includes Regional Banking, Diversified Products and the Consumer Deposits groups, as well as Wells Fargo Customer Connection (formerly Wells Fargo Phone Bank, Wachovia Direct Access, the National Business Banking Center and Credit Card Customer Service).

Wells Fargo also has around 2,000 stand alone mortgage branches throughout the country. It also does mortgage wholesale lending through independent mortgage brokers.

Wealth, brokerage, and retirement

Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC and Wells Fargo Advisors, as well as through national broker/dealer firms. Mutual funds are offered under the Wells Fargo Advantage Funds brand name. The company also serves high net worth individuals through its private bank and family wealth group.

Wells Fargo Advisors is the brokerage and wealth management subsidiary of Wells Fargo, located in St. Louis, Missouri. It is the third largest brokerage firm in the United States as of the third quarter of 2010 with $1.1 trillion retail client assets under management.^[15]

Wells Fargo Advisors was known as Wachovia Securities until May 1, 2009, when it legally changed names following the Wells Fargo's acquisition of Wachovia Corporation.

Internet services

Wells Fargo launched its personal computer banking service in 1989 and was the first bank to introduce access to banking accounts on the web in May 1995.

Wells Fargo's Business Online Banking gives small business owners all the services available to consumers, plus services designed specifically for businesses.

Wholesale

The Wholesale Banking segment contains products sold to large and middle market commercial companies, as well as to consumers on a wholesale basis. This includes lending, treasury management, mutual funds, asset-based lending, commercial real estate, corporate and institutional trust services, and capital markets and investment banking services through Wells Fargo Securities. Wells Fargo historically has avoided large corporate loans as stand-alone products, instead requiring that borrowers purchase other products along with loans—which the bank sees as a loss leader. One area that is very profitable to Wells, however, is asset-based lending: lending to large companies using assets as collateral that are not normally used in other loans. This can be compared to subprime lending, but on a corporate level. The main business unit associated with this activity is Wells Fargo Capital Finance. Wells Fargo also owns Eastdil Secured, which is described as a "real estate investment bank" but is essentially one of the largest commercial real estate brokers for very large transactions (such as the purchase and sale of large Class-A office buildings in central business districts throughout the United States).

Wells Fargo Securities

Wells Fargo Securities ("WFS") is the full service investment banking arm of Wells Fargo & Co. It is the 10th largest in the world (as measured by fee revenue) and exists today as an amalgamation of several legacy enterprises, most notably Wachovia Securities. The size and financial performance of the group is not disclosed publicly, but analysts believe the investment banking group houses approximately 2,000 employees and generates between $3 and $4 billion per year in investment banking revenue. By comparison, two of Wells Fargo’s largest competitors, Bank of America and J.P. Morgan generate approximately $5.5 billion and $6 billion respectively (not including sales and trading revenue). ^[16] WFS has U.S. offices in New York, Charlotte, San Francisco and Los Angeles, and internationally in London and Hong Kong.

History

Wells Fargo Securities was established in 2009 to house Wells Fargo’s new capital markets group which it obtained during the Wachovia acquisition. Prior to that point, Wells Fargo had little to no participation in investment banking activities, though Wachovia had a well established investment banking practice which it operated under the Wachovia Securities banner.

Wachovia's institutional capital markets and investment banking business arose from the merger of Wachovia and First Union. First Union had bought Bowles Hollowell Connor & Co. on April 30, 1998 adding to its merger and acquisition, high yield, leveraged finance, equity underwriting, private placement, loan syndication, risk management, and public finance capabilities. ^{[17] [18]}

Legacy components of Wells Fargo Securities include Wachovia Securities, Bowles Hollowell Connor & Co., Barrington Associates, Halsey, Stuart & Co., Leopold Cahn & Co., Bache & Co. and Prudential Securities. WFS most recently acquired the investment banking arm of Citadel LLC.^[19]

Growth plans

In a speech delivered to the Stanford Graduate School of Business in 2009, then-Wells Fargo CEO Dick Kovacevich stated that he believed Wells Fargo Securities would be among the top five investment banks in the 'next few years.' ^[21] Regarding Wells Fargo’s traditional aversion to complex institutional capital markets business lines, current CEO John Stumpf said that investment banking had “changed a lot,” that Wells now had fewer competitors and was a bigger company with more clients who need capital market access. ^[22] According to Jonathan Weiss and Robert Engel, co-heads of investment banking and capital markets, the group intends to grow by 10% to 20% per year for the foreseeable future. Wells Fargo disclosed that investment banking revenue from underwriting and M&A advisory increased 44% in 2010 over the prior year. ^[23]

Business model

The present business model of Wells Fargo is summed up in its vision statement: "We want to satisfy all our customers' financial needs and help them succeed financially."^[24]

Wells Fargo's stated goal is to encourage customers to buy all financial products through Wells Fargo: "We want to earn 100 percent of our customers' business. The more products customers have with Wells Fargo the better deal they get, the more loyal they are, and the longer they stay with the company, improving retention. Eighty percent of our revenue growth comes from selling more products to existing customers. Our goal: sell at least eight products to every customer."^[25]

This is a concept known as "cross-selling", or as Wells Fargo refers to it, "needs-based selling," which is popular in the financial services industry. Certain companies, such as Prudential, pioneered the concept of selling a variety of products, the companies acting merely as holding companies, with each product sold through its own distribution channel. However, predecessor Norwest pioneered selling all its products through all its channels, with discounts given to those who purchase a larger variety.

The average "cross-sell ratio" for a financial institution is two (based on an average American consumer owning sixteen different financial products from eight different institutions). Wells Fargo stated they had a cross-sell ratio of 5.5 (2007 data) products per Community Banking household (almost one in five have more than eight), 6.1 (2007 data) for Wholesale Banking customers, and the average middle-market commercial banking customer has more than seven products, which is among the highest in the country.^[26]

Global presence

Wells Fargo provides comprehensive personal banking services throughout the world. With Main Office in Hong Kong & London^[27][28] Also, as announced on June 9, 2011, Wells Fargo Securities has planned an aggressive expansion of its investment banking practice internationally, adding positions to its existing offices in Asia, Europe, and Latin America.

Wells Fargo has a presence in India as well. Wells Fargo India Solutions (WFIS) is a wholly owned subsidiary of Wells Fargo. WFIS is an extended arm of the organization created to support the needs for expansion in technology and business processes. Set up in September 2006 in Hyderabad, India, it is already operating out of two facilities in the city and has people strength of over 1500. Its two Offices are located at Raheja MindSpace, Hitech City, and Divyashree, Raidurg respectively. Early in 2011, WFIS started its Bangalore office, as an extension of Wells Fargo's presence in India.

History

The current Wells Fargo is a result of a 1998 merger between Minneapolis-based Norwest Corporation and the original Wells Fargo.^[29] Although Norwest was the nominal survivor, the new company kept the Wells Fargo name to capitalize on the long history of the nationally recognized Wells Fargo name and its trademark stagecoach (the company's previous slogan, "The Next Stage," is a nod to the company's wagons-west motif). After the acquisition, the parent company moved its headquarters to San Francisco. The company's new Slogan, "Together we'll go Far" also references the stagecoach motif, its customers and the company name.

In-store branches

There are many mini-branches located inside of other buildings, which are almost exclusively grocery stores, that usually contain ATMs, basic teller services, and, space permitting, an office for private meetings with customers.^[30]

Wachovia acquisition

On October 3, 2008, Wachovia agreed to be bought by Wells Fargo for about $14.8B in an all-stock transaction. This news came four days after the Federal Deposit Insurance Corporation (FDIC) made moves to have Citigroup buy Wachovia for $2.1B. Citigroup protested Wachovia's agreement to sell itself to Wells Fargo and threatened legal action over the matter. However the deal with Wells Fargo overwhelmingly won shareholder approval since it valued Wachovia at about 7 times what Citigroup offered. To further ensure shareholder approval, Wachovia issued Wells Fargo with preferred stock holding 39.9% of the voting power in the company.^[31]

On October 4, 2008, a New York state judge issued a temporary injunction blocking the transaction from going forward while the situation was sorted out.^[32] Citigroup alleged that they had an exclusivity agreement with Wachovia that barred Wachovia from negotiating with other potential buyers. The injunction was overturned late in the evening on October 5, 2008, by New York state appeals court.^[33] Citigroup and Wells Fargo then entered into negotiations brokered by the FDIC to reach an amicable solution to the impasse. Those negotiations failed. Sources say that Citigroup was unwilling to take on more risk than the $42 billion that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42 billion). Citigroup did not block the merger, but indicated they would seek damages of $60 billion for breach of an alleged exclusivity agreement with Wachovia.^[34]

Predecessors

Wells Fargo operates under Charter #1, the first national bank charter issued in the United States. This charter was issued to First National Bank of Philadelphia on June 20, 1863 by the Office of the Comptroller of the Currency.^[35] Traditionally, acquiring banks assume the earliest issued charter number. Thus, the first charter passed from First National Bank of Philadelphia to Wells Fargo through its 2008 acquisition of Wachovia, which in turn had inherited it through one of its many acquisitions.

Selected predecessor companies

• Crocker National Bank
• First Interstate Bancorp
• First National Bank of Philadelphia
• First Security Corporation
• Norwest Corporation
• Wachovia Corporation

2008 financial crisis

On October 28, 2008, Wells Fargo and Company was the recipient of $25B of the Emergency Economic Stabilization Act Federal bail-out in the form of a preferred stock purchase.^[36][37] Tests by the Federal government revealed that Wells Fargo needs an additional 13.7 billion dollars in order to remain well capitalized if the economy were to deteriorate further under stress test scenarios. On May 11, 2009 Wells Fargo announced an additional stock offering which was completed on May 13, 2009 raising $8.6 billion in capital. The remaining $4.9 billion in capital is planned to be raised through earnings. On Dec. 23, 2009, Wells Fargo redeemed the $25 billion of series D preferred stock issued to the U.S. Treasury under the Troubled Asset Relief Program’s Capital Purchase Program. As part of the redemption of the preferred stock, Wells Fargo also paid accrued dividends of $131.9 million, bringing the total dividends paid to the U.S. Treasury and U.S. taxpayers to $1.441 billion since the preferred stock was issued in October 2008.^[38]

Key dates

• 1852: Henry Wells and William G. Fargo (Mayor of Buffalo, NY from 1862–63 and again from 1864–65), the two founders of American Express, form Wells Fargo & Company to provide express and banking services to California.
• 1860: Wells Fargo gains control of Butterfield Overland Mail Company, leading to operation of the western portion of the Pony Express.
• 1866: 'Grand consolidation' unites Wells Fargo, Holladay, and Overland Mail stage lines under the Wells Fargo name.
• 1904: A.P. Giannini creates the Bank of Italy in San Francisco.
• 1905: Wells Fargo separates its banking and express operations; Wells Fargo's bank is merged with the Nevada National Bank to form the Wells Fargo Nevada National Bank.
• 1918: As a wartime measure, the U.S. government nationalizes Wells Fargo's express franchise into a federal agency known as the U.S. Railway Express Agency (REA). The government takes control of the express company. The bank begins rebuilding but with a focus on commercial markets. After the war, REA is privatized and continues service
• 1923: Wells Fargo Nevada merges with the Union Trust Company to form the Wells Fargo Bank & Union Trust Company.
• 1928: Giannini forms Transamerica Corporation as a holding company for his banking and other interests.
• 1929: Northwest Bancorporation, or Banco, is formed as a banking association.
• 1954: Wells shortens its name to Wells Fargo Bank.
• 1957: Transamerica spins off its banking operations, including 23 banks in 11 western states, as Firstamerica Corporation.
• 1960: Wells Fargo merges with American Trust Company to form the Wells Fargo Bank American Trust Company.
• 1961: First America changes its name to Western Bancorporation.
• 1962: Wells again shortens its name to Wells Fargo Bank.
• 1968: Wells converts to a federal banking charter, becoming Wells Fargo Bank, N.A.
• 1969: Wells Fargo & Company holding company is formed, with Wells Fargo Bank as its main subsidiary.
• 1981: Western Bancorporation changes its name to First Interstate Bancorp.
• 1982: Banco acquires consumer finance firm Dial Finance which is renamed Norwest Financial Service the following year.
• 1983: Banco is renamed Norwest Corporation.
• 1983: Largest U.S. bank heist to date takes place at a Wells Fargo depot in West Hartford, Connecticut.
• 1986: Wells Fargo acquires Crocker National Corporation from Midland Bank.
• 1987: Wells Fargo acquires the personal trust business of Bank of America.
• 1988: Wells Fargo acquires Barclays Bank of California from Barclays plc.
• 1995: Wells Fargo becomes the first major financial services firm to offer Internet banking.
• 1996: Wells Fargo acquires First Interstate for $17.3 billion.
• 1998: Wells Fargo Bank merges with Norwest Corp. of Minneapolis.
• 1999: Wells Fargo Bank acquires National Bank of Alaska
• 2000: Wells Fargo acquires First Security Corporation.
• 2001: Wells Fargo acquires H.D. Vest Financial Services.
• 2007: Wells Fargo acquires CIT Construction.
• 2007: Wells Fargo acquires Placer Sierra Bank.
• 2007: Wells Fargo acquires Greater Bay Bancorp.
• 2008: Wells Fargo acquires United Bancorporation of Wyoming
• 2008: Wells Fargo acquires Century Bank.
• 2008: Wells Fargo acquires Wachovia Corporation.
• 2009: Wells Fargo acquires North Coast Surety Insurance Services

Historical data

^[39]

Wells Fargo Bank was the fifth largest bank at the end of 2008 as an individual bank. (Not including subsidiaries)

Environmental record

Wells Fargo ranked No.1 among banks and insurance companies – and No.13 overall – in Newsweek magazine’s inaugural “Green Rankings” of the country’s 500-largest companies.

So far, Wells Fargo has provided more than $6 billion in financing for environmentally beneficial business opportunities, including supporting 185 commercial-scale solar photovoltaic projects and 27 utility-scale wind projects nationwide.

As a member of the U.S. Environmental Protection Agency's Climate Leaders program, Wells Fargo aims to reduce its absolute greenhouse gas emissions from its U.S. operations by 20% below 2008 levels by 2018.

Wells Fargo has launched what it believes to be the first blog among its industry peers to report on its environmental stewardship and to solicit feedback and ideas from its stakeholders.^[40]

"We want to be as open and clear as possible about our environmental efforts – both our accomplishments and challenges – and share our experiences, ideas and thoughts as we work to integrate environmental responsibility into everything we do," said Mary Wenzel, director of Environmental Affairs. "We also want to hear and learn from our customers. By working together, we can do even more to protect and preserve natural resources for future generations."

Recent controversies

On February 4, 2009, Wells Fargo announced it was canceling a four-day business meeting and employee recognition event in Las Vegas. There had been negative allegations from the media, members of Congress and other public officials that the trip was a "pricey Las Vegas casino junket" and that the company was misusing taxpayers' money, since Wells Fargo had been one of the banks that received "bailout" funds from the government a few months earlier.^[41]

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Latinos into high-cost subprime loans. A Wells Fargo spokesman responded that "The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor..."^[42]

In a March 2010 agreement with federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report suspected money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.^[43]

In August 2010, Wells Fargo was fined by U.S. District Judge William Alsup for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees.^[44][45][46]

Tax dodging and lobbying

In December 2011, the non-partisan organization Public Campaign criticized Wells Fargo for spending $11 million on lobbying and not paying any taxes during 2008-2010, instead getting $681 million in tax rebates, despite making a profit of $49 billion, laying off 6,385 workers since 2008, and increasing executive pay by 180% to $49.8 million in 2010 for its top 5 executives.^[47]

Wells Fargo corporate buildings

• Wells Fargo Building in Milwaukee, WI
• Wells Fargo Center in Los Angeles
• Wells Fargo Center in Seattle, WA
• Wells Fargo Center in Boise, ID
• Wells Fargo Center in Spokane, WA
• Wells Fargo Center in Albuquerque, NM
• Wells Fargo Center in Minneapolis, MN
• Wells Fargo Center in Denver, CO
• Wells Fargo Center in Davenport, IA
• Wells Fargo Center in West Des Moines, IA
• Wells Fargo Center in Austin, TX
• Wells Fargo Center in Norfolk, VA
• Wells Fargo Center in Las Vegas, NV
• Wells Fargo Center in Portland, OR
• Wells Fargo Center in Salt Lake City, UT
• Wells Fargo Center in Sacramento, CA
• Wells Fargo Headquarters in San Francisco
• Wells Fargo Advisors Headquarters in St. Louis, MO
• Wells Fargo Place in Saint Paul, MN
• Wells Fargo Plaza in El Paso, TX
• Wells Fargo Plaza in Tacoma, WA
• Wells Fargo Plaza in Houston, TX
• Wells Fargo Plaza in Phoenix, AZ
• Wells Fargo Tower in Colorado Springs, CO
• Wells Fargo Tower in Birmingham, AL
• One Wells Fargo Center in Charlotte, North Carolina
• Duke Energy Center (Formerly; Wachovia Corporate Center) in Charlotte – Wells Fargo owns and occupies space in the building^[48]

See also

• Stagecoach
• Butterfield Stage
• Pony Express
• Wells Fargo Center
• Wells Fargo Arena
• History of Wells Fargo
• List of Wells Fargo Directors
• List of Wells Fargo Presidents

Notes

References

• "Frequently Asked Questions". Wells Fargo History. Retrieved October 26, 2005.
• "Is there a way to look up relatives who may have worked as stagecoach drivers for Wells Fargo?" Wells Fargo History. Retrieved October 26, 2005.
• Mehta, Julie. "Merger means a bigger bank but uncertainty for employees". Cupertino Courier. January 31, 1996. Retrieved October 26, 2005.
• Segal, Dave. "Both CB Bancshares' Ronald Migita and Central Pacific's Clint Arnoldus have been through bruising bank battles before". Honolulu Star-Bulletin. July 13, 2003. Retrieved October 26, 2005.
• Svaldi, Aldo. "Wells Fargo learned hard way about deals". Denver Business Journal. June 12, 1998. Retrieved October 26, 2005.
• Baker, David R. "When hostile takeovers backfire". San Francisco Chronicle. December 19, 2004. p. C1. Retrieved October 26, 2005.
• In July 2007, Wells Fargo Insurance Services Inc. was ranked fifth in Business Insurance's world's largest brokers list.
• "Wells Fargo Buying Placer Sierra Banks". location=Sacramento, CA. January 11, 2007. http://cbs13.com/local/Wells.Fargo.Placer.2.475105.html. Retrieved June 12, 2010. 
• Said, Carolyn (May 5, 2007). "Wells Fargo buys bank / Greater Bay has 41 branches in the Bay Area". San Francisco Chronicle. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/05/BUGU0PLI6H1.DTL. Retrieved June 12, 2010. 

External links

Media related to [//commons.wikimedia.org/wiki/Category:Wells_Fargo Wells Fargo] at Wikimedia Commons

• Wells Fargo website
• SWOT Analysis of Wells Fargo