Wells Fargo
Gate China 2014 Wells Fargo Christine McEnery and Diana Wang
Business Overview Wells Fargo & Company (Wells Fargo or ‘the company’) is a diversified financial services company that provides consumer and commercial financial services (banking, insurance, investments, mortgage and consumer and commercial finance). The Company was founded in 1852 in San Francisco and, since its merger with Norwest Corporation in 1998, has grown largely through acquisitions. Currently ranked 25th on Fortune’s 2014 largest American corporations, Wells Fargo has over $1.5 trillion in assets, 9000 locations and offices in 36 countries. Wells Fargo operates in the following three segments: 1. Community Banking –diversified financial services to consumers and small businesses with sales below $20MM 2. Whole Sale Banking – financial solutions to businesses with annual sales greater than $20MM. Services and products include commercial, corporate, capital markets, cash management and real estate banking 3. Wealth, Brokerage and Retirement – financial advisory, lending, and investment management and trust services to clients. Wells Fargo’s implements a cross-sell strategy, in which it strives to meet its customers’ entire financial needs by offering a diversified range of financial products and services. The Company believes its diversified business model and geographic presence are two key aspects of its ability to grow in all economic cycles.
Operations in China Wells Fargo has an office in Beijing supported by five business representatives and a branch in Shanghai supported by 65 staff employees. They have a conservative global expansion strategy and do not intent to conduct commercial banking in China. Wells Fargo’s strategy is to build
and leverage networks (communities, Chamber of Commerce, etc) to bring awareness of Wells Fargo services to Chinese consumers. Clients within China mainly utilize Wells Fargo for commercial real estate services. Wells Fargo’s strategy is to assist Chinese banks in the US to conduct business in China to minimize their risk in this investment.
Financial & Operating Statistics $MM (USD); Financial Data as of 4.21.2014 Revenues Net Income Market Capitalization
83,780 21,878 258,650
Price per Share Stock Exchange Number of Employees # of Locations in China
$48.93 NYSE 269,200 2
SWOT Analysis Strengths Weaknesses 1. Market leader in the US financial industry – largest retail mortgage lender, auto lender, 1. Despite strong presence in US small business lender, and bond industry, lacks strong international administrator presence 2. Benefits from economies of scale 2. Low efficiency ratio and inefficient 3. Sells multiple products to each consumer expense management is negatively impacting net margins 4. Strong capital position utilized to hedge against market risks Opportunities
Threats
1. Wealth management (private banking, trust management, retirement record keeping) is projected to provide short-term and long-term rewards 2. Increase online consumer base to improve operational performance 3. Focus on growing immigrant population within the US
1. Loss from Wachovia acquisition is impacting margins 2. Increasing compliance risks as a result of increases in regulations 3. US market uncertainty is a large risk to Wells Fargo due to their dependence on the US market
Company Visit Questions 1. How has online technology impacted Wells Fargo’s interaction with your customers? 2. How does Wells Fargo’s operations in China fit into the larger strategic plan for the Company?
3. How does the credit evaluation for Chinese consumers and companies differ from those of American consumers and companies? 4. What are some of the main drivers of growth in China for Wells Fargo’s three divisions: Community Banking, Whole Sale Banking and Wealth, Brokerage and Retirement? 5. Are there any regulations in the China market that pose risks to Wells Fargo? 6. How do the financial regulations differ in China versus America?
Business Overview Wells Fargo & Company (Wells Fargo or ‘the company’) is a diversified financial services company that provides consumer and commercial financial services (banking, insurance, investments, mortgage and consumer and commercial finance). The Company was founded in 1852 in San Francisco and, since its merger with Norwest Corporation in 1998, has grown largely through acquisitions. Currently ranked 25th on Fortune’s 2014 largest American corporations, Wells Fargo has over $1.5 trillion in assets, 9000 locations and offices in 36 countries. Wells Fargo operates in the following three segments: 1. Community Banking –diversified financial services to consumers and small businesses with sales below $20MM 2. Whole Sale Banking – financial solutions to businesses with annual sales greater than $20MM. Services and products include commercial, corporate, capital markets, cash management and real estate banking 3. Wealth, Brokerage and Retirement – financial advisory, lending, and investment management and trust services to clients. Wells Fargo’s implements a cross-sell strategy, in which it strives to meet its customers’ entire financial needs by offering a diversified range of financial products and services. The Company believes its diversified business model and geographic presence are two key aspects of its ability to grow in all economic cycles.
Operations in China Wells Fargo has an office in Beijing supported by five business representatives and a branch in Shanghai supported by 65 staff employees. They have a conservative global expansion strategy and do not intent to conduct commercial banking in China. Wells Fargo’s strategy is to build
and leverage networks (communities, Chamber of Commerce, etc) to bring awareness of Wells Fargo services to Chinese consumers. Clients within China mainly utilize Wells Fargo for commercial real estate services. Wells Fargo’s strategy is to assist Chinese banks in the US to conduct business in China to minimize their risk in this investment.
Financial & Operating Statistics $MM (USD); Financial Data as of 4.21.2014 Revenues Net Income Market Capitalization
83,780 21,878 258,650
Price per Share Stock Exchange Number of Employees # of Locations in China
$48.93 NYSE 269,200 2
SWOT Analysis Strengths Weaknesses 1. Market leader in the US financial industry – largest retail mortgage lender, auto lender, 1. Despite strong presence in US small business lender, and bond industry, lacks strong international administrator presence 2. Benefits from economies of scale 2. Low efficiency ratio and inefficient 3. Sells multiple products to each consumer expense management is negatively impacting net margins 4. Strong capital position utilized to hedge against market risks Opportunities
Threats
1. Wealth management (private banking, trust management, retirement record keeping) is projected to provide short-term and long-term rewards 2. Increase online consumer base to improve operational performance 3. Focus on growing immigrant population within the US
1. Loss from Wachovia acquisition is impacting margins 2. Increasing compliance risks as a result of increases in regulations 3. US market uncertainty is a large risk to Wells Fargo due to their dependence on the US market
Company Visit Questions 1. How has online technology impacted Wells Fargo’s interaction with your customers? 2. How does Wells Fargo’s operations in China fit into the larger strategic plan for the Company?
3. How does the credit evaluation for Chinese consumers and companies differ from those of American consumers and companies? 4. What are some of the main drivers of growth in China for Wells Fargo’s three divisions: Community Banking, Whole Sale Banking and Wealth, Brokerage and Retirement? 5. Are there any regulations in the China market that pose risks to Wells Fargo? 6. How do the financial regulations differ in China versus America?
