Subject category:
Finance, Accounting and Control
Published by:
Amity Research Centers
Length: 14 pages
Data source: Published sources
Abstract
Post the acquisition of Wachovia Corporation in 2008, Wells Fargo & Company (Wells Fargo), an American international banking giant, got an access into investment banking business. Instead of selling out, Wells Fargo decided to expand the investment banking business. As a result, in the first quarter of 2013, in the global investment banking business, Wells Fargo ranked in the top 10 position (in terms of revenue share). Wells Fargo surpassed standalone firms such as Jefferies and heavy weight firms such as HSBC, Royal Bank of Canada, BNP Paribus, and Nomura. Moreover, in the first quarter of 2015, Wells Fargo’s securities unit reported earnings of USD445 million as non-interest income. With such earning, the company moved to the top 10 ranking of investment bankers in terms of fees earned. But, analysts opined that Wells Fargo was slowly creeping into more complex and riskier territory. Investors were also worried that 'Wells Fargo's growth in investment banking is a departure from its traditional focus on bread-and-butter banking'. Few analysts opined that the investment banking offered Wells Fargo an alternative means to expand revenues at a time when banks were struggling to boost profitability in an era of low interest rates. However, outside the US market, Wells Fargo's investment banking business lacked considerable weight. Nevertheless, Wells Fargo decided to implement slow, steady and disciplined approach for growing its business in the European markets by focusing on credit, asset-backed finance, equities and clearing. At the same time, the investment banking operations of Wells Fargo were too small compared to the Wall Street giants such as, JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of America. In the backdrop of the above scenario, experts wondered whether Wells Fargo's increased focus on investment banking was in the right direction.
About
Abstract
Post the acquisition of Wachovia Corporation in 2008, Wells Fargo & Company (Wells Fargo), an American international banking giant, got an access into investment banking business. Instead of selling out, Wells Fargo decided to expand the investment banking business. As a result, in the first quarter of 2013, in the global investment banking business, Wells Fargo ranked in the top 10 position (in terms of revenue share). Wells Fargo surpassed standalone firms such as Jefferies and heavy weight firms such as HSBC, Royal Bank of Canada, BNP Paribus, and Nomura. Moreover, in the first quarter of 2015, Wells Fargo’s securities unit reported earnings of USD445 million as non-interest income. With such earning, the company moved to the top 10 ranking of investment bankers in terms of fees earned. But, analysts opined that Wells Fargo was slowly creeping into more complex and riskier territory. Investors were also worried that 'Wells Fargo's growth in investment banking is a departure from its traditional focus on bread-and-butter banking'. Few analysts opined that the investment banking offered Wells Fargo an alternative means to expand revenues at a time when banks were struggling to boost profitability in an era of low interest rates. However, outside the US market, Wells Fargo's investment banking business lacked considerable weight. Nevertheless, Wells Fargo decided to implement slow, steady and disciplined approach for growing its business in the European markets by focusing on credit, asset-backed finance, equities and clearing. At the same time, the investment banking operations of Wells Fargo were too small compared to the Wall Street giants such as, JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of America. In the backdrop of the above scenario, experts wondered whether Wells Fargo's increased focus on investment banking was in the right direction.