Wells Now Talking Up Investment Banking: Backs into Business with First Security Deal
Mandaro, Laura, American Banker
Tucked away in its acquisition of Salt Lake City-based First Security Corp. was a business Wells Fargo & Co. never knew it wanted.
First Security owned Van Kasper, a 32-year-old third-tier San Francisco investment banking boutique. In recent days, Wells Fargo executives have been trumpeting the addition of the business as a great opportunity to cross-sell Van Kasper's initial public offerings to the bank's roster of wealthy private clients.
Yet, just a few months ago, Wells Fargo executives were not exactly enthusiastic about investment banking, even though they acknowledge having explored ways of bringing IPOs to private clients. In a September interview, Wells Fargo vice chairman and chief operating officer Leslie S. Biller said that despite the recent convergence among banks and large Wall Street firms, "investment banking is not our cup of tea."
"Where we see opportunities is with consumers and small and medium-size businesses," he said.
Mr. Biller was reiterating the often repeated remarks of chief executive officer Richard Kovacevich that a large acquisition -- such as Chase Manhattan Corp.'s pending purchase of J.P. Morgan & Co. or NationsBank Corp.'s purchase of Montgomery Securities in 1997 -- was not in his future.
A similar statement made by Mr. Kovacevich in Forbes magazine triggered some candid questions by Van Kasper employees about the firm's future with the bank when Mr. Kovacevich addressed them in a conference call last week. During that call, Mr. Kovacevich said he had been misquoted and expressed delight at the addition of Van Kasper.
Dennis Mooradian, president of Wells Fargo's private client services and one of the two executives who is managing the business (along with its president and chief executive officer, F. Van Kasper), said the bank is not absorbing Van Kasper as the result of a strategic push in capital markets.
"You might say we back-doored into the investment banking business," Mr. Mooradian said in an interview. "We've never had that opportunity."
Wells Fargo said it is moving quickly to implant its cross-referral system on both the retail and corporate sides of First Security. Plans are already in place to put a Wells Fargo trust officer and a private banker in Van Kasper's San Diego offices. Bruce Emmeluth, head of corporate finance at Van Kasper, said some joint investment banking deals "are already in the pipeline."
The 380-person firm has brought on at least seven investment bankers in anticipation of its merger. Late last week it announced the hiring of Robert L. Quist, 47, formerly with Merrill Lynch & Co.'s venture capital business development group, as a managing director to head technology investment banking. …