In terms of its resources and assets, Wells Fargo made good strategic decision at acquiring several dozen financial services institutions which further strengthened its position in the market culminating in the acquisition of Wachovia, becoming one of its prized units. The merger with Wachovia further strengthened the balance sheet and income potential of Wells Fargo considering the virtual doubling of the customer base and the retail business of both banks. Cross selling as a result became one big opportunity for Wells Fargo as it increased the number of growth areas in strategic positions around the continent.
Along the Liability area, Wells Fargo further enhanced its deposit liability position with the significant addition of the noninterest bearing deposit and strong retail base provided by Wachovia as well as its own large base of interest-free funds. The consolidated debt position however remained within stable proportions as these are backed up by a large percentage of retail and community banking business which is in themselves less volatile compared with big corporate accounts which are very vulnerable and sensitive to internal as well as external crisis factors or extreme influences.
Comparatively, Wells Fargo fares so well among its competitors in terms of return on asset as shown in Table 10. Table 11 indicates the relative attractiveness of Wells Fargo stocks even as independent credit providers are too conservative to provide credit rating which nevertheless has shown double digit enhancements over forecasts. In terms of capital risk, Wells Fargo’s stable solvency figures and ratios provide some form of assurance and comfort to its shareholders as this becomes a critical manifestation of the control philosophy of management especially in cases of acquisitions and mergers.
While being conservative in this regard, Wells Fargo carefully considers stringent planning before embarking on expansion through this area. Its conservative stance is among its strength. Operational decision making at Wells Fargo, although turning more complex and risky as shown by the regulatory issues affecting, has been thorough, effective and cost-effective as it foresees managed cost reduction by about $3 billion over the next three years even after factoring merger and integration expenses. This is expected considering the synergy of the bank’s retail services and Wachovia’s service experience.
Such issues as overlapping manpower and corporate structures will contribute greatly to the saves factors, However, overall strategies will prevent or correct certain risk, even success factors/forces that could lead to deterioration or means to outperform its peers. These factors include current crimes that have victimized similar financial institutions – full automation to avoid frauds, scams, identity theft and similar financial acts of terrorism which might undermine its big corporate control system.
A tight accounting and control functions will help check and mitigate check frauds, increase cash control, enhancing customer access to services but closely monitoring ACH transactions through pre-authorizations as well as de-risking the financials especially the balance sheet with low-return or non-performing items, stabilize and spread loan losses provisions to prevent stock market shocks and speculative attacks. Other operating measures will include funds marketing that will increase the core deposit base as this will increase liquidity and boost solvency further to favorable proportions.
These measures, coupled with the organization control and culture adopted throughout the years has proven to protect the bank’s performance along operational, lending, noninterest income, asset-liability management, organizational expansion risks present in the industry. Wells Fargo will strongly benefit from focusing itself on the consumer, small and middle market relationships, broad diversification, further increasing its 80 plus businesses and growth opportunities, cross sell synergies, strengthening its community and regional banking advantage as well as its distinct specialization for excellent services.
Well Fargo is expected to perform, even outperform its peers during the next five years as it continues to exceed industry standards with its best practices philosophy and control mindset pervading its human resource thinking and operational character through value-added financial advise making its people its real competitive advantage. This vision has passionately guided the bank over the last sixteen years and which can be attributed to its growth ten times over.
And if its people continue to improve through learning and sharing with each other, learning to continue to listen to their customers—then solving every problem, seizing every opportunity, and making every decision will be relatively easy.
Wells Fargo Financials, Retrieved December 13, 2008, website:http://www. advfn. com/quote_Wells-Fargo—C_NYSE_WFC. html Annual Report 2007, Wells Fargo; Retrieved December 14, 2008, Website: https://www.wellsfargo.com/