Wells Fargo

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Wells Fargo

Image:Wells fargo.png



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Template:Infobox Company Wells Fargo NYSE: WFC is a diversified financial services company in the United States, with consumer finance subsidiaries doing business in Canada, the Northern Mariana Islands and the Caribbean.

Headquarted in San Francisco, Wells Fargo is a result of the acquisition of California-based Wells Fargo & Co. by Minneapolis-based Norwest Corporation in 1998. Norwest changed its name to Wells Fargo by the start of 2000.


Lines of business

Wells Fargo CEO Richard Kovacevich has commented often that Wells Fargo contains "more than 80 lines of businesses." It is unclear, however, if Kovacevich is calling a "line of business" something which sells to outside customers with some sort of distinct distribution system or simply a product set. Wells Fargo does have almost every major financial services product. In addition, Wells is known as being the most "integrated" of financial services companies. This is because of Wells's goal of cross selling every financial product their customers might want. So for example, instead of running a stock brokerage with separate branches and differnet customers, Wells Fargo stock brokers sit in Wells Fargo branches and generally only serve Wells Fargo banking customers. In addition Wells Fargo's computer systems are relatively more advanced then other financial services companies in this respect, for example allowing all of the products to be shown on one statement.

Despite this wide range of businesses, Wells Fargo only delineates three different business segments when reporting results: Retail Banking (Which is financial services for consumers), Wholesale Banking (which is financial services for corporations and certain services which are sold wholesale to consumers), and Consumer Finance. This is unlike many other financial services companies which provide more detail about particular businesses or product lines. The reason for this is twofold: because it fits with Wells Fargo's philosophy of attempting to sell all the financial products a customer would want, and because since the point of showing lines of business segments is to allow investors to compare their results with similar companies, it would be difficult for Wells to "normalize" the results for comparisons sake since any particular product is often not sold in the same way it would be for a standalone company.

The retail banking segment contains the community banking group (which contains the branches which are thought of as "distribution centers"), and card services consumer credit group and consumer deposits group (which are thought of as the "manufacturing centers" for many of the products sold in the branches. Wells has 3094 branches in 23 states. Wells also has around 400 stand alone mortgage branches throughout the country. Its mortgage operations have been in the top one or two in originations and servicing for many years. It also does mortgage wholesale lending through independant mortgage brokers. Wells generally has had a more unified computing system between states then comparable banks such as Bank of America. This division also contains the Wells Fargo stock brokers (called "private client services").

Wells Fargo Financial is the consumer finance segment of Wells Fargo. It engages in sub prime lending through 1284 branches throughout the country and in certain foreign countries. Sub prime lending is lending to people with poor credit histories, charging a higher interest rate due to the higher risk. This division also engages in "indirect lending" for things such as furniture stores (so that customers can obtain financing to buy furniture right in the furniture store).

The Wholesale segment contains products sold to large companies, as well as to consumers on a "wholesale" basis. This includes lending, treasury management, mutual funds, asset based lending, commercial real estate, and some investment banking. Wells Fargo historically has avoided large corporate loans as stand alone products, and insisted that borrowers purchase other products with loans, which it sees as a loss leader. One area that is very profitable to Wells however is asset based lending, which is lending to large companies using assets not normally used in other loans. This can be compared to "sub prime" lending, but on a corporate level. The main brand name for this activity is "Wells Fargo Foothill", which regularly publishes tomb stone ads in the Wall St. Journal. Wells Fargo is the largest asset based lender of this kind. Wells Fargo also owns the first and largest "real estate investment bank", which assists commercial property owners in obtaining funds in the capital markets, as opposed to direct lending by Wells Fargo itself.

Wells Fargo has a few other product sets which it sells nationally and directly. One is auto finance, which is indirect lending through car dealers. Another major one is large business property and causualty insurance brokerage, though the Wells Fargo subsidiary Acordia. In addition Wells brokers crop insurance. All together, Wells Fargo has the largest insurance brokerage operations amongst banks. It also has a national institutional asset management business called Peregrine capital. It also lends nationally to small businesses via mail solicitation.

Wells Fargo has historically had a large private equity business, which still retains the Norwest brand name. This was the most sucsessfull private equity company in 2003, although it was eclipsed by others who made substantial amounts of money in the Google IPO. This really doesn't fit in with Wells Fargo's stated busines model, but is retained because as Kovacevich has said "these are guys who make a lot of money for us".


Business model

The present business model of Wells Fargo (formerly Norwest) is summed up in its vision statement: "We want to satisfy all the financial needs of our customers, help them through our advice to succeed financially, be known as the premier provider of financial services and be one of America's great companies". Wells Fargo's goal is to coax its customers to buy all their financial products through Wells Fargo. This is a concept known as "cross-selling", which is popular in the financial services industry at present, and was pionereed primarily by Kovacevich.

An American citizen uses an average of 16 financial products, but usually buys them from an average of 8 different institutions. In other words, the average financial institution has a cross-sell ratio of 2. Wells Fargo currently has the highest cross-sell ratio in the industry of 4.5, but would like to improve its ratio to 8. This has been called by some the "agglomerator" business model, which is popular with many successful big-box retailers, such as Home Depot, Office Depot, and Wal-Mart. To execute this model, Wells Fargo lobbied hard for deregulation of the banking industry, and for repeal of many of the laws that were passed during the Great Depression like the Glass-Steagall Act.


Corporate DNA

Wells Fargo is the end result of more than 2000 mergers. The holding company was previously known as Norwest National bank and before that Northwest National Bank. Norwest was numerically the most aquistive bank in the 1980's. Most of the management and the business model of the present day Wells Fargo come from Norwest Bank, and the stock history of Wells Fargo is that of Norwest bank.



Henry Wells and William Fargo founded Wells Fargo & Co. in 1852 as a stagecoach and banking company during the California Gold Rush. Its major focus was its express business until World War I, when the U.S. government nationalized the express business; the company then shifted its focus to financial services. The stagecoach still appears prominently in Wells Fargo advertising and brand image. The main pioneer of the Wells Fargo Bank was I.W. Hellman.

The current CEO is Richard Kovacevich.



Wells Fargo received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2004, the third year of the report. In addition, the company was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine. In 2002, the company was named the number one company for gender diversity by Diversity! magazine.


Selected predecessor companies


External links

  • Wells Fargo corporate About page: http://www.wellsfargo.com/about/about.jhtml
  • Wells Fargo history FAQ: http://www.wellsfargohistory.com/history/faqsite.html
  • WFC: Profile for WELLS FARGO & CO - Yahoo! Financeit:Wells Fargo and Co


  • Help sought in finding Wells Fargo bank robbery suspect - San Francisco Chronicle
  • Citigroup,Wells Fargo cut;US bank stocks resilient - Reuters
  • Citigroup, Wells Fargo cut; US bank stocks resilient - MSN Money
  • Citigroup, Wells Fargo cut by BofA - Reuters
  • UPDATE 1-RESEARCH ALERT-BofA cuts Citigroup, Wells Fargo - Reuters
  • Stull, Stull & Brody Announces Class Action Against Wells Fargo & ... - Market Wire (press release)
  • Wells Fargo Home Mortgage Opens Nearly 50 Culturally-Themed ... - PR Newswire (press release)
  • Wells Fargo Offers 0 Percent Origination Fee Federal Stafford ... - PR Newswire (press release)
  • Citigroup, Wells Fargo cut; US bank stocks resilient - Brocktown News
  • Wells Fargo downgraded to "neutral" - New Ratings

Image:Wikipedia-small.png Wikipedia article about Wells Fargo (search). This article uses material from that article.

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