Wells Fargo & Co. and Norwest Corp. are the latest companies to join in the merger-mania that is sweeping the financial services industry.
The companies, both of which have Utah operations, announced Monday that they will merge in a $34 billion deal that will create a combined organization with $191 billion in assets and 5,777 financial services stores in all 50 states and internationally.Dan Conway, Wells Fargo spokesman, said it is too early to judge the impact of the deal on the bank's 26 Utah branches and 186 full-time equivalent employees.
Wells Fargo returned to Utah in March 1996, after a 91-year absence, when it acquired 32 First Interstate Bank of Utah branches as part of a $11.3 billion merger. That combination did not run smoothly, as the bank struggled with record-keeping and crediting deposits to wrong accounts.
"We are going to proceed in a manner to prevent that from reoccurring," Conway said Monday. "We realize that we inconvenienced customers, and we are going to be diligent in not repeating that."
He said the merged company, which will keep the Wells Fargo name and San Francisco headquarters, will be able to provide more services to customers. The "huge merger of equals" probably will not close until the end of 1998, he said, as it still requires regulatory and stockholder approval.
"This is just the preliminary merger announcement," Conway said. "The details of the impact on any market, including Utah, are yet to be discerned."
Larry Haeg, spokesman for Minneapolis-based Norwest, said that company does not have any banks in Utah, but it does have 33 "stores," including 15 for mortgages, 13 for consumer finance, four for auto lending and one for business credit. The Norwest Mortgage operation is one of the top five home mortgage lenders in Salt Lake City, he said.
"(The merger) is a big plus because, at least for Norwest Mortgage, it will become Wells Fargo Mortgage," Haeg said Monday. "It will give us the opportunity to offer mortgages to all of our new bank customers in Utah."
Although he did not have an exact headcount, Haeg said most of Norwest's mortgage and finance stores employ about six people. But he said he did not anticipate cutbacks in Utah as a result of the merger, and he does see possibilities for expansion.
Under the merger, an exchange of stock will leave Wells Fargo stockholders owning about 52.5 percent of the combined companies and Norwest stockholders owning about 47.5 percent.
Paul Hazen, chairman and chief executive of Wells Fargo, will be chairman of the new organization. Richard M. Kovacevich, chairman and chief executive of Norwest, will be president and chief executive of the merged company.
The two companies estimate there will be about $950 million in transition-related expenses but expect to achieve at least $650 million in cost savings by the third year of operation.
The new company would be the sixth-largest bank in the United States if all other bank mergers announced this year are completed.
The deal marks the latest proposed combination in the financial services industry. Other recent major combinations that have been announced have included Citicorp and Travelers Group, BankAmerica Corp. and Nationsbank Corp., and First Chicago NBD and Banc One Corp.
Norwest shares were trading down about $2.44, or more than 6 percent, at $37.25 on the New York Stock Exchange Monday morning. Wells Fargo shares were up $1.75 at $365.