Wells Fargo & Company is an American international banking and financial services holding company headquartered in San Francisco, California, with “hubquarters” throughout the country.[5] It is the world’s second largest bank by market capitalization[6] and the third largest bank in the U.S. by assets.[7] In July 2015, Wells Fargo became the world’s largest bank by market capitalization, edging past ICBC,[7] before slipping behind JP Morgan Chase in September 2016, in the wake of a scandal involving the alleged creation of over a million fake bank accounts by thousands of Wells Fargo employees.[6] Wells Fargo surpassed Citigroup Inc. to become the third-largest U.S. bank by assets at the end of 2015. Wells Fargo is the second largest bank in deposits, home mortgage servicing, and debit cards. 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.
In 2016, Wells Fargo ranked 7th on the Forbes Magazine Global 2000 list of largest public companies in the world[8] and ranked 27th on the Fortune 500 list of largest companies in the United States.[9] In 2015, the company was ranked the 22nd most admired company in the world, and the 7th most respected company in the world.[8]
As of October 2015, the company had a credit rating of AA−.[10] However, for a brief period in 2007, the company was the only AAA-rated bank.[11]
Wells Fargo in its present form is a result of a merger between San Francisco–based Wells Fargo & Company and Minneapolis-based Norwest Corporation in 1998 and the subsequent 2008 acquisition of Charlotte-based Wachovia. Following the mergers, 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.
Along with JPMorgan Chase, Bank of America, and Citigroup, Wells Fargo is one of the “Big Four Banks” of the United States.[12] As of December 31, 2015, it had 8,700 retail branches and 13,000 automated teller machines.[8] The company operates across 35 countries and has over 70 million customers globally.[8]
In February 2014, Wells Fargo was named the world’s most valuable bank brand for the second year running[13] in The Banker and Brand Finance study of the top 500 banking brands.[14]
Current operations
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.[15] 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.[16]
Consumer Lending
Wells Fargo Home Mortgage is the largest retail mortgage lender in the United States, as of Q3 2011, originating one out of every four home loans.[17] Wells Fargo services $1.8 trillion in home mortgages, the 2nd largest servicing portfolio in the U.S.[18] It was reported in 2012 Wells Fargo reached 30% market share for US mortgages, however, CEO John Stumpf has said the numbers are misleading because about half of that share represented the aggregation of smaller loans that were then sold on in the secondary market. Now, in 2013 its share is closer to 22%; of which eight percentage points is aggregation.[19]
Wells Fargo private student loans
Wells Fargo private student loans help students pay for eligible college expenses, such as; tuition, books, computers, or housing.[20] Loans are available for undergraduate, career and community colleges, graduate school, law school and medical school. Wells Fargo also provides private student loan consolidation and student loans for parents.
Wholesale banking
Its 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. One area that is very profitable to Wells Fargo, however, is asset-based lending: lending to large companies using accounts receivable and inventory as collateral, though less traditional assets are often included in the collateral package. Historically, this type of lending has been done when normal routes of raising funds, such as the Capital Markets or unsecured bank loans, have been exhausted. 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).
Small business loans
Wells Fargo produced over 1,900 loans backed by the Small Business Administration (SBA) from late 2012 to early 2013.[citation needed]
Equipment lending
Wells Fargo has various divisions that finance and lease equipment to all manner of companies. One venture is Wells Fargo Rail, which in 2015 completed the purchase of GE Capital Rail Services and merged in with First Union Rail.
Wealth and Investment Management
Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC and Wells Fargo Advisors, LLC, 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 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.[8]
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.
Wells Fargo Securities (“WFS”) is the investment banking division of Wells Fargo & Co. The size and financial performance of the group is not disclosed publicly, but analysts believe the investment banking group houses approximately 4,500 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 Chase generated approximately $5.5 billion and $6 billion respectively in 2011 (not including sales and trading revenue).[21] WFS headquarters is based in Charlotte, North Carolina with other U.S. offices in New York, Minneapolis, Boston, Houston, San Francisco, and Los Angeles, and international offices in London and Hong Kong.
Cross-selling
A key part of Wells Fargo’s business strategy is cross-selling, the practice of encouraging existing customers to buy additional banking products.[22] Customers inquiring about their checking account balance may be pitched mortgage deals and mortgage holders may be pitched credit card offers in an attempt to increase the customer’s profitability to the bank, and to make it more difficult for the customer to switch to a different bank.[23][24] Other banks have attempted to emulate Wells Fargo’s cross-selling practices (described by The Wall Street Journal as a hard sell technique);[23] Forbes magazine describes Wells Fargo as “better than anyone” at the practice.[24]
International operations
Wells Fargo provides banking services throughout the world, with offices in Hong Kong, London, Dubai, and India.[25][26]
Charter
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.[27] 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 had inherited it through one of its many acquisitions.
