Headquartered in San Francisco, California (its bank, Wells Fargo Bank, N.A., is legally chartered in Sioux Falls, South Dakota), Wells Fargo is a result of a merger between California-based Wells Fargo & Co. and Minneapolis-based Norwest Corporation in 1998. The new company chose to keep the name Wells Fargo, to capitalize on the 150-year history of the nationally-recognized Wells Fargo name and its trademark stagecoach (the company's slogan, "The Next Stage", is a play off of the stagecoach motif Wells Fargo uses). After the merger, the company maintained its headquarters in San Francisco.

As of December 31, 2006, Wells Fargo has 6,062 retail branches, over 23 million customers, and 158,000 employees.

Lines of business

Wells Fargo offers a wide range of financial services, claiming in its investor presentations to operate more than 80 divisions while being somewhat ambiguous over just what constitutes a business divisions in that context.[1] In addition, the company claims to be one of the most "integrated" of financial services companies. For example, instead of running a stock brokerage with separate branches and different customers, Wells Fargo stock brokers sit in retail branches, and generally only serve banking customers.

Despite this wide range of divisions, Wells Fargo only delineates three different business segments when reporting results: Retail Banking, Wholesale Banking, and Consumer Finance. This is unlike many other financial services companies which provide more detail about particular businesses or product lines.

Community Banking

The Community Banking segment includes Regional Banking, Wealth Management Group Diversified Products and the Consumer Deposits groups. Wells Fargo personal-account clients are encouraged to purchase multiple-product "packages" offering preferred-client discounts. Examples of such packages are:

"Wells Fargo Free Account" tied to payroll direct deposit from a participating employer;
"Wells Fargo Complete Advantage Account" tied to balances in multiple deposit accounts, loans, or a home mortgage;
"Wells Fargo Portfolio Management Account" tied to balances in brokerage accounts, IRAs, deposits, and loans.
Wells Fargo also has around 9400 stand alone mortgage branches throughout the country. It also does mortgage wholesale lending through independent mortgage brokers.

Internet services

Wells Fargo launched its PC banking service in 1989 and was the first bank to introduce access to banking accounts on the Web in May 1995. Using Wells Fargo's Online Banking, consumers can pay bills to anyone in the U.S., trade securities, view their account information, and transfer money between their Wells Fargo accounts and to other Wells Fargo account holders. In addition to banking and trading online, customers can apply for new accounts and products, find the nearest ATM or branch, change their address, view canceled checks, deposits and statements, enroll in account alerts, track their spending habits through Wells Fargo's "My Spending Report" and set and track savings goals with "My Savings Plan". To protect customers from fraud, Wells Fargo introduced e-mail sent to your online banking or personal e-mail and send wireless alerts if high-risk transactions are detected.

Wells Fargo's Business Online Banking gives small business owners all the services available to consumers, plus access to reporting tools and services to help them manage their business finances. New offerings, such as account-based alerts, check images, spending reports, delegation, and payment suite functionality have been 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 investment banking through Wells Fargo Capital Management. 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 brand name for this activity is "Wells Fargo Foothill," and is regularly marketed in tombstone ads in the Wall Street Journal. Wells Fargo also owns the 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.

Consumer finance

Wells Fargo Financial is the consumer finance segment. It engages in sub-prime lending through over 1,000 branches throughout the U.S. and in certain other countries. This division also engages in "indirect lending" for such organizations as furniture retailers. This business is based out of Des Moines, Iowa. Norwest purchased DIAL Finance before the merger with Wells Fargo. The Home Mortgage group is based out of West Des Moines, Iowa.

Business model

The present business model of Wells Fargo is summed up in its vision statement: "We want to satisfy all of our customers' financial needs, help them succeed financially, be the premier provider of financial services in every one of our markets, and be known as one of America's great companies."

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."

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 purports to have a cross-sell ratio of 5.2 products per Community Banking household (almost one in five have more than eight), six 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. (Washington Mutual was beating them at the end of 2003 with a 5.59 ratio.) Achieving such a high cross-sell ratio would result in a financial services version of the "agglomerator" business model, most popular among the big-box retailers, such as Home Depot, Office Depot, and Wal-Mart. In order to facilitate achievement of this goal, 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 Social Responsibility

Wells Fargo promotes economic development and self-sufficiency through financial education, charitable contributions, and affordable housing. In 2006, the Wells Fargo Foundation contributed $103 million to over 14,000 non-profits. The company helps provide affordable housing through $1.4 billion in community development lending. In 2004, the company introduced its financial literacy program, Hands on Banking, which teaches basic money management skills to children, teens and adults. In 2005 the company announced a 10-point environmental commitment that outlines goals, practices and principles around environmental responsibility at Wells Fargo. In 2007 the Environmental Protection Agency named Wells Fargo the number one purchaser of renewable energy in the US with its purchase of 550 kilowatts of renewable energy certificates. The company produced its first Corporate Citizenship report in 2005.

History

Key dates

1852: Henry Wells and William G. Fargo, the two founders of American Express, form Wells, Fargo & Company to provide express and banking services to California.
1860: Wells Fargo gains control of 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 franchise into a government agency known as the American Railway Express Agency. The government takes control of everything except the bank. The bank begins rebuilding but with a focus on commercial markets.
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: Firstamerica 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 Corporation, which is renamed Norwest Financial Service the following year.
1983: Banco is renamed Norwest Corporation.
1986: Wells Fargo acquires Crocker National Corporation.
1987: Wells Fargo acquires the personal trust business of Bank of America.
1988: Wells Fargo acquires Barclays Bank of California.
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: Norwest acquires Wells Fargo for $31.7 billion and adopts the Wells Fargo name.
2000: Wells Fargo acquires First Security Corporation.

Corporate predecessors

Wells Fargo & Company is the end result of more than 2,000 mergers.[citation needed] The holding company was previously known as Norwest Corporation and before that Northwestern National Bank (BANCO). Norwest was "one of the most acquisitive banks of the 1990's...."[6] 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.

Selected predecessor companies

Crocker National Bank
First Interstate Bancorp
Norwest Corporation

Recent controversy

Like many large-scale companies, Wells Fargo has attracted many vocal detractors who protest their business practices, customer service, fee levels, and other aspects of the company. (For more examples and specifics, search Complaints.com.) There is even a Wells Fargo Watch project dedicated to tracking all alleged instances of corporate malfeasance, especially ongoing investigations into alleged predatory lending practices in Wells' mortgage division.

In September 2003, New York State Attorney General Eliot Spitzer sought information about the lending practices of Wells Fargo and other national banks. Two suits seeking injunctive relief were filed against Spitzer, one by the Office of the Comptroller of Currency and one by the Clearinghouse association of banks, asserting that Spitzer had no authority to regulate the activities of national banks. The suits both resulted in the granting of injunctive relief preventing the continuation of Spitzer's efforts to obtain bank information, including Wells Fargo information.

In December 2005, the conservative parachurch group Focus on the Family ended its banking relationship with Wells Fargo, due to the group's opposition to the gay rights movement, after 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.

On the other hand, Wells Fargo has been seen as avoiding many of the ethical problems of other financial services companies in the past decade:

Its stock research operations were never part of the Global settlement paid by other companies for conflicted research
Its insurance brokerage division was not accused by Eliot Spitzer of engaging in an illegal contingent commission scheme, even though it has the 5th largest insurance brokerage practice and nearly all other major brokerages were accused
Its Mutual Fund division was not found to have let others engage in illegal market timing, even though many of the largest fund companies were accused of this.
Its subprime lending division, although criticized by ACORN and others, never had to pay out any of the major fines that its peers such as Household Financial or CitiFinancial had to.