Is Wells Fargo Heading South?
Wells Fargo (NYSE:WFC) has moved its first 900 employees to Charlotte, North Carolina, where the United States’ fourth-largest bank plans to grow its securities operation into a successful investment banking business. Even though the city is located 600 miles away from New York City, the institution believes that Charlotte will provide the right atmosphere for the venture to thrive, Bloomberg reported on Tuesday.
“On a day-by-day basis in terms of information flow, it’s all electronic, and we’re as wired as anyone else,” John Shrewsberry, president of the company’s securities unit, said in an interview with the publication. “People don’t run out of their buildings in downtown or midtown Manhattan and meet in the street to talk about markets.”
Historically, Wells Fargo has focused growing its branch network to provide necessary services for its customers, but the bank is now expanding its strategy to include investment banking. The bank’s timing was not coincidental; nine global securities firms, including JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), cut more than 32,000 jobs in 2012, and UBS (NYSE:UBS) has exited the business entirely. Like Bank of America (NYSE:BAC), Wells Fargo is attempting to capitalize on the less competitive market…
The bank, which has not posted an annual loss in more than a decade, also wants to take advantage of one of its most profitable sectors; investment-banking revenue grew 30 percent in 2012 from a year earlier.
Charlotte, where Bank of America ran a 550-banker operation until several years ago, holds several benefits for Wells Fargo. In particular, Wachovia, the bank that Wells Fargo acquired in 2008, is based in the city, and can provide a team of approximately 1,500 bond traders and investment bankers for the operation. Furthermore, as Shrewsberry told Bloomberg, the “lifestyle perks,” cheaper housing, and the growing prestige of the bank will be incentives for other needed employees.
Regarding Wells Fargo’s move to the small financial center of Charlotte, University of North Carolina finance professor Tony Plath told the publication that it should allow the bank to take more time to hire talented workers and consultants than it would be able to in New York, a strategy consistent with its emphasis on customer service.