The acquisition of Wachovia by Wells Fargo, to give fillip to its deposits and mortgage operations, is a vindication that the bank is again focussing on investment banking as corporate stock and bond sales soar – reported Bloomberg.
Earlier this month, the Wachovia Securities, which includes the acquired investment banking and capital markets divisions, was re-branded as Wells Fargo Securities. The divison has generated $5.2 billion revenue in Q2 2009, double the revue before the Wachovia acquisition took place. Wholesale banking accounted for 23% of the total revenue during that period.
The bank is making inroads into investment banking by offering more services to existing clients. Apart from advising Sprint Nextel and Virgin Mobile deal and Targa Resources Partners agreement to buy its founder’s natural- gas-liquids business this year, it had advised Oracle’s debt sale also last year. The bank is also reviving equity research division. It is expected to further extend its reach in securities business, when it repurchases its stake in Prudential Financial – reported the newspaper.
However, Joe Morford, an analyst at RBC Capital Markets in San Francisco, said that eventhough, Wells Fargo can get business from current clients, it can not beat Goldman, JPMorgan and Morgan Stanley. Rightly, according to the Bloomberg data, the New York-based lenders have advised almost 28% of the biggest M&A deals announced so far this year, while Wells Fargo is lying at the bottom with 0.2%.
