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Wells Fargo: history, lines of business, business models and Environmental record

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Wells Fargo & Company
Type Public (NYSE: WFC)
Industry Banking
Financial services
Founded San Francisco, CA (1852)
Headquarters San Francisco, California, United States
Area served Worldwide
Key people John G. Stumpf
(Chairman, President & CEO)
Products Retail banking
Investment banking
Commercial banking
Mortgages
Consumer finance
Insurance
Payday advance
Revenue decrease $85.210 billion (2010)[1]
Profit increase $12.362 billion (2010)[1]
Total assets increase $1.258 trillion (2010)[1]
Total equity increase $127.889 billion (2010)[1]
Employees 272,200 (2010)[1]
Website WellsFargo.com
Wells Fargo & Company is a diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the US by assets and the largest bank by market capitalization.[2] Wells Fargo is the second largest bank in deposits, home mortgage servicing, and debit card. In 2007 it was the only bank in the United States to be rated AAA by S&P,[3] though its rating has since been lowered to AA-[4] in light of the financial crisis of 2007–2010.
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 for legal purposes.
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. Although Norwest was technically the surviving entity, 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 2010 Wells Fargo had 6,335 retail branches (called stores by Wells Fargo), 12,094 automated teller machines, 281,000 employees and over 70 million customers. Wells Fargo operates stores and ATMs under Wells Fargo's and Wachovia's names.
Wells Fargo is one of the Big Four banks of the United States with Bank of America, Citigroup and JP Morgan Chase.[5][6][7][8][9][10][11]

Lines of business

Wells Fargo offers a range of financial services in over 80 different business lines.[12] 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, excluding Galveston, Texas. It also does mortgage wholesale lending through independent mortgage brokers.
Wells Fargo in Laredo, Texas, is located near Mall Del Norte.
 

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.jpg
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.[13]


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.
The new Wells Fargo vSafe service offers online storage of documents.

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 investment banking through Wells Fargo Securities. The company also owns Barington Associates, a middle market investment bank. 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).

Business model


Wells Fargo Footprint.png
A map of states and cities where Wells Fargo operates retail banks.
 
 
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."[14]
Wells Fargo's goal is to encourage its customers to buy all their 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."[15]
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. While earlier companies, such as Prudential, pioneered the concept of selling a variety of products, they acted merely as holding companies and each product was 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.[16]

Global presence

Wells Fargo provides comprehensive personal banking services throughout the world. With Main Office in Hong Kong & London[17]
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.

History

Main article: History of Wells Fargo
The current Wells Fargo is a result of a 1998 merger between Minneapolis-based Norwest Corporation and the original Wells Fargo.[18] 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

An in-store branch in a Pavilions supermarket in Anaheim Hills
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.[19]


Wachovia acquisition superseding plans by Citigroup

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 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.[20]
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.[21] 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.[22] 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 $42B that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42B). Citigroup did not block the merger, but indicated they would seek damages of $60B for breach of an alleged exclusivity agreement with Wachovia.[23]

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.[24] Traditionally, acquiring banks assume the earliest issued charter number. Thus, the first charter passed from First National Bank of Philadelphia to Wells Fargo through one of its many acquisitions.
Selected predecessor companies

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.[25][26] 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.[27]

Achievements

In 2010, The Barbara Saville Women's Shelter named Wells Fargo "business of the year."[28]

Key dates

Wells Fargo bank in Chinatown, Houston
 
 
  • 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. Norwest changes its name to Wells Fargo and moves to San Francisco.
  • 1999: Wells Fargo Bank merges with 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

Asset & Liability
Asset/Liability Ratio
Net Income
[29]


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 #1 among banks and insurance companies – and #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 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.[30]
"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

Unbalanced scales.svg
 A concern has been raised that this article's Criticism section may be compromising the article's neutral point of view of the subject. Possible resolutions may be to integrate the material in the section into the article as a whole, or to rewrite the contents of the section. Please see the discussion on the talk page. (November 2010)
A Wells Fargo branch in Logan, Utah
 
 
Wells Fargo has been the target of activist actions because they are one of the largest investors into the GEO Group.[31] The GEO Group operates private prisons and immigrant detention facilities which have been criticized for serious abuses of detainees.[32][33]
In December 2005, the parachurch group Focus on the Family ended its banking relationship with Wells Fargo.[34] This was due to Wells Fargo's support of the gay rights movement when the company announced that it was matching contributions to GLAAD. Wells Fargo continued the program and received widespread support in the face of the boycott, which had no other high-profile participants.
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..."[35]
Wells Fargo is the defendant in a class action suit for its failure to live up to its contractual obligations under President Obama's Home Affordable Modification Program.[36]
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.[37][38][39]

Wells Fargo corporate buildings

One Wells Fargo CenterCharlotte, North Carolina, will succeed as Headquarters for East Coast Operations of Wells Fargo[40][41] -
Wells Fargo Center in Los Angeles
Wells Fargo Center in Minneapolis
Wells Fargo Center in Denver
Wells Fargo Center in Albuquerque

See also

San Francisco Bay Area portal
Companies portal

Notes

  1. ^ a b c d e Rakesh R.S. Garia (2010-04-13). "FY2009 Annual Report". wellsfargo.com. WellsFargo. http://finance.yahoo.com/q/bs?s=WFC+Balance+Sheet&annual. Retrieved 2010-04-13. 
  2. ^ "Wells Fargo & Company: NYSE:WFC quotes & news - Google Finance". Google.com. http://www.google.com/finance?q=NYSE:WFC. Retrieved 2010-12-16. 
  3. ^ Browser Warning
  4. ^ "S&P Downgrades Wells Fargo, U.S. Bancorp, Other Banks". BusinessWeek. 2009-06-17. http://www.businessweek.com/investor/content/jun2009/pi20090617_892748_page_2.htm. Retrieved 2009-07-29. 
  5. ^ Winkler, Rolfe (September 15, 2009). "Break Up the Big Banks". Reuters. http://blogs.reuters.com/rolfe-winkler/2009/09/15/break-up-the-big-banks/. Retrieved 17 December 2009. 
  6. ^ Tully, Shawn (February 27, 2009). "Will the banks survive?". Fortune Magazine/CNN Money. http://money.cnn.com/2009/02/27/news/economy/tully_banks.fortune/index.htm?source=yahoo_quote. Retrieved 17 December 2009. 
  7. ^ "Citigroup posts 4th straight loss; Merrill loss widens". USA Today. Associated Press. 2008-10-16. http://www.usatoday.com/money/companies/earnings/2008-10-16-citigroup_N.htm. Retrieved 17 December 2009. 
  8. ^ Winkler, Rolfe (August 21, 2009). "Big banks still hold regulators hostage". Reuters, via Forbes.com. http://www.forbes.com/feeds/afx/2009/08/21/afx6803343.html. Retrieved 17 December 2009. 
  9. ^ Temple, James; The Associated Press (November 18, 2008). "Bay Area job losses likely in Citigroup layoffs". The San Francisco Chronicle. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/17/BURD146AIA.DTL. Retrieved 17 December 2009. 
  10. ^ Dash, Eric (August 23, 2007). "4 Major Banks Tap Fed for Financing". The New York Times. http://www.nytimes.com/2007/08/23/business/23discount.html. Retrieved 17 December 2009. 
  11. ^ Pender, Kathleen (November 25, 2008). "Citigroup gets a monetary lifeline from feds". The San Francisco Chronicle. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/24/BUST14B71M.DTL. Retrieved 17 December 2009. 
  12. ^ Oman,Mark. "UBS Global Financial Services Conference." [PDF] Investor Presentation. San Francisco: Wells Fargo & Co., 11 May 2005. pp. 17, 23. Retrieved 7 November 2005.
  13. ^ "Wells Fargo Today". Wells Fargo and Company. https://www.wellsfargo.com/downloads/pdf/about/wellsfargotoday.pdf. Retrieved 2010-12-14. 
  14. ^ "Our vision: Where we’re going." Vision and Values.'.' Retrieved 28 November 2010.
  15. ^ "How We Measure Success." Vision and Values.'.' Retrieved 26 October 2005.
  16. '^ "Financial Review: Overview." Wells Fargo Annual Report 2004. [PDF] San Francisco: Wells Fargo & Co., 2005. p. 35. Retrieved 27 October 2005.
  17. ^ https://www.wellsfargo.com/inatl/consumer_services/personal_banking
  18. ^ Browser Warning
  19. ^ https://www.wellsfargo.com/locator/atm/home Click "Wells Fargo In-Store Branches" for a pop-up with this information
  20. ^ Wells Fargo agrees to buy Wachovia, Citi objects
  21. ^ Citi: Wells Fargo blocked from buying Wachovia
  22. ^ Court tilts Wachovia fight toward Wells Fargo
  23. ^ Wells Fargo plans to buy Wachovia; Citi ends talks
  24. ^ http://blog.wellsfargo.com/wachovia/2010/06/the_end_of_one_era_and_continu.html
  25. ^ [1][dead link]
  26. ^ Landler, Mark and Dash, Eric (October 14, 2008). "Drama Behind a $250 Billion Banking Deal". The New York Times (The New York Times Company). http://www.nytimes.com/2008/10/15/business/economy/15bailout.html. Retrieved 2009-02-04. 
  27. ^ https://www.wellsfargo.com/press/2009/20091223_tarp_repayment
  28. ^ "Women's Shelter Names Wells Fargo Business of the Year". MarketWatch. 2010-04-15. http://www.marketwatch.com/story/womens-shelter-names-wells-fargo-business-of-the-year-2010-04-15?reflink=MW_news_stmp. Retrieved 2010-06-12. 
  29. ^ Money Economics Top 10 Banks Project
  30. ^ "Wells Fargo Environmental Forum". Blog.wellsfargo.com. http://blog.wellsfargo.com/environment/index.html. Retrieved 2010-06-12. 
  31. ^ "Wells Fargo Attacked in Unincorporated Area of Santa Cruz". Indybay. http://www.indybay.org/newsitems/2008/09/28/18541764.php. 
  32. ^ Turnbull, Lornet (2008-07-16). "Report charges abuse of immigrant detainees at Tacoma center". Seattle Times. http://seattletimes.nwsource.com/html/localnews/2008053884_detention16m.html. Retrieved 2008-12-04. 
  33. ^ "Detention Center Study" (PDF). Seattle University School of Law. http://www.hatefreezone.org/downloads/Detention%20Center%20Study.pdf. Retrieved 2008-12-04. [dead link]
  34. ^ "Focus on the Family Severs Ties with Wells Fargo". Focus on the Family. December 1, 2005. Retrieved March 27, 2006.
  35. ^ "Illinois Files Bias Suit Against Wells Fargo", Reuters, July 31, 2009]
  36. ^ [2], Courthouse News
  37. ^ Gelles, Jeff (2010-08-15). "Consumer 10.0: How Wells Fargo held up debit-card customers". The Philadelphia Inquirer. http://www.philly.com/inquirer/business/20100815_Consumer_10_0__How_Wells_Fargo_held_up_debit-card_customers.html. 
  38. ^ Numerian (2010-08-12). "The checking account scam—How Wells Fargo gouged its customers". The Agonist. http://agonist.org/numerian/20100812/the_checking_account_scam_how_wells_fargo_gouged_its_customers. Retrieved Aug. 15, 2010. 
  39. ^ "Wells Fargo loses consumer case over overdraft fees". Los Angeles Times. 2010-08-10. http://articles.latimes.com/2010/aug/10/business/la-fi-wells-20100810. 
  40. ^ a b Downey, John (26 February 2009). "Duke moves HQs to Wachovia tower - Charlotte Business Journal". Charlotte.bizjournals.com. http://charlotte.bizjournals.com/charlotte/stories/2009/02/23/daily43.html. Retrieved 2010-06-12. 
  41. ^ http://www.gastongazette.com/news/wachovia-26014-wells-fargo.html

References

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External links