A group of activists opposed to Wells Fargo's plan to buy National Bancorp of Alaska Inc. for $907 million says it also intends to file a challenge with the Federal Reserve protesting the San Francisco-based bank's acquisition of First Security Bancorp in Salt Lake City.
Wells Fargo agreed to acquire First Security on April 10 in a deal valued at $3.2 billion. Assuming that regulatory and shareholder approvals are forthcoming, the merger is expected to close later this year. The combined company would be the largest banking franchise, in terms of deposits, in Utah, Nevada, Idaho and New Mexico.The groups opposing the Alaskan merger are Inner City Press/Community on the Move, a community lending activist group based in New York, and Alaska Public Interest Research Group, a consumer advocacy group.
Inner City and Alaska PIRG Monday asked the Fed to kill Wells Fargo's buyout of National Bancorp of Alaska, saying that a Wells Fargo subsidiary, Norwest Home Improvement Inc., has shown a pattern of lending discrimination by making most of its "subprime" loans to minorities. Subprime loans are those with higher interest rates due to the borrowers' poor credit history.
Bloomberg business news Monday quoted Matthew Lee, executive director of Inner City Press, based in the Bronx, as saying that Fed Chairman Alan Greenspan and Fed Board of Governors member Edward Gramlich have called for a crackdown on "predatory lending" practices.
"If they mean what they've said, there are many things in Wells Fargo they will look at and clean up in this process,"Lee was quoted as saying. His group has protested other bank mergers.
Lee said he intends to file a similar challenge to Wells Fargo's acquisition of First Security but gave no further information.
Wells Fargo spokesman Tom Unger told the Deseret News Tuesday that the chances of Lee stopping Wells' acquisition of First Security are "somewhere between zero and none." Unger said Lee seems to have made a career out of protesting bank mergers and isn't sure what he gets out of it.
"It would be different if we were a bad company and not doing anything for the community," said Unger, "but we are doing a great job investing in our communities, and we don't need this kind of pressure to do so. We do it on our own."
Unger cited a 1996 commitment to make $45 billion of community reinvestment loans over 10 years, plus a 10-year plan to donate $300 million to not-for-profit groups.
Meanwhile, Wells Fargo has closed down its Norwest Home Improvement subsidiary, saying it duplicated functions of its Norwest Financial Inc. consumer finance subsidiary.
The Fed's review of the Alaska deal includes consideration of Wells Fargo's record under the Community Reinvestment Act of 1977, which requires banks to provide credit in low-income communities where they take deposits.
Fed spokesman David Skidmore told Bloomberg the central bank considers such comment letters within its review and often cites protests when issuing its decisions.
The community lending record isn't the only reason for the protest filed by Inner City Press and Alaska PIRG. "Wells Fargo has a history of service reductions, branch closings and diminished focus on the local communities in which it buys banks," the groups said in their Fed filing.
Unger said such comments don't reflect "the new Wells Fargo" created in 1998 when it merged with Norwest Corp., a financial services company with a bigger rural presence.
A National Bancorp spokeswoman said the company is reviewing the filing. "We are hoping to receive regulatory approval in early May," followed by a shareholder vote on the transaction in June, she told Bloomberg.
You can reach Max B. Knudson by e-mail at max@desnews.com