Top Banking Brands - Wells Fargo Profile

Wells Fargo

Brand Strapline
The Next Stage

Offices: 5,897
Employees: 167,500
Country: United States

Wells Fargo Brand 2009 - Facts & Figures


	2009		2008
Brand Value	$14,508m	Brand Value	$13,130m
Brand Ranking	3	Brand Ranking	8
Market Cap	$108,691m	Market Cap	$94,593m
Brand Value / Market Cap (%)	13%	Brand Value / Market Cap (%)	14%
Brand Rating	AA	Brand Rating	AA

History of the Company

In 1852 the two founders of American Express, Henry Wells and William Fargo, founded Wells, Fargo & Co. in California to serve the West. The new company offered banking (buying gold, and selling paper bank drafts as good as gold) - and express (rapid delivery of the gold and anything else valuable).

In 1855, Wells Fargo faced its first crisis when the California banking system collapsed as a result of unsound speculation. A run on Page, Bacon & Company, a San Francisco bank, began when the collapse of its St. Louis, Missouri, parent was made public. The run soon spread to other major financial institutions, all of which, including Wells Fargo, were forced to close their doors. The following Tuesday Wells Fargo reopened in sound condition, despite a loss of one-third of its net worth. Wells Fargo was one of the few financial and express companies to survive the panic, partly because it kept sufficient assets on hand to meet customers' demands rather than transferring all its assets to New York.

Surviving the Panic of 1855 gave Wells Fargo two advantages. First, it faced virtually no competition in the banking and express business in California after the crisis; second, Wells Fargo attained a reputation for dependability and soundness. From this platform of opportunity the company began a period of sustained expansion of both its banking and express businesses

In 1905 Wells Fargo separated its banking and express operations. In the same year Wells Fargo's bank the merged with the Nevada National Bank, founded in 1875 by the Nevada silver moguls, to form the Wells Fargo Nevada National Bank. Wells Fargo & Company Express continued its operations until 1918 when the government forced the company to consolidate its domestic operations with those of the other major express companies. This wartime measure resulted in the formation of American Railway Express (later Railway Express Agency), which began operations July 1, 1918. Wells Fargo continued some overseas express operations until the 1960s; as an operator of bank armored cars.

The Panic of 1907,which began in New York in October, followed on the heels of this frenetic reconstruction period. Several New York banks, deeply involved in efforts to manipulate the stock market, experienced a run when speculators were unable to pay for stock they had purchased. The run quickly spread to other New York banks, which were forced to suspend payment, and then to Chicago and the rest of the country. Wells Fargo lost $1 million in deposits weekly for six weeks in a row. The years following the panic were committed to a slow and painstaking recovery. In 1924, Wells Fargo Nevada National Bank merged with the Union Trust Company to form the Wells Fargo Bank & Union Trust Company. Careful reinvestment of the bank's earnings meant the bank prospered during the 1920s, and placed it in a good position to survive the Great Depression. Following the collapse of the banking system in 1933, the company was able to extend immediate and substantial help to its troubled correspondents.

The war years were prosperous and uneventful for Wells Fargo Bank & Union Trust. In the 1960s the bank's name was shortened to Wells Fargo. It then underwent substantial growth in the 1970s. However, in 1981 the banking community was shocked by the news of a $21.3 million embezzlement scheme by a Wells Fargo employee, one of the largest embezzlements ever. L. Ben Lewis, an operations officer at Wells Fargo's Beverly Drive branch, pleaded guilty to the charges. Lewis had routinely written phony debit and credit receipts to pad the accounts of his cronies, and received a $300,000 cut in return.

The early 1980s saw a sharp decline in Wells Fargo's performance. Rather than taking advantage of banking deregulation, which was enticing other banks into all sorts of new financial ventures, the bank kept things simple and focused on California. Wells Fargo's retail network was beefed up through improved services such as an extensive automatic teller machine network, and through active marketing of those services, but its lack of financial innovation saw it fall behind the performance of its competitors. However, this low-risk strategy meant that Wells Fargo largely avoided the recession of the early 1990s. In May 1986, Wells Fargo purchased rival Crocker National Corporation from Britain's Midland Bank for about $1.1 billion.

In early 1996, Wells Fargo completed a hostile takeover of First Interstate Bancorp, and then Wells Fargo entered into a friendly merger agreement with Norwest, which was announced in June 1998. Although Norwest was the nominal survivor, the new company kept the Wells Fargo name to capitalize on the long history of the nationally-recognized Wells Fargo name and its trademark stagecoach (the company's slogan, "The Next Stage," is a nod to the company's wagons-west motif).

On October 3, 2008 Wachovia agreed to be bought by Wells Fargo for about $14.8bn in an all stock transaction.

Geography and Products

The brand is less well-known globally than some of its American rivals (such as Citi and Bank of America), but as the bank operates almost exclsively in the USA this is of little significance. Most of its operations are in the retail sector.

Fig1. Wells Fargo Product Segmentation 2009 - Click on image to Expand into another window

Fig2. Wells Fargo Geographic Segmentation 2009 - Click on image to Expand into another window

History of the Brand

Wells Fargo is an iconic American brand, with an established presence across the West and Mid-West of America. The stagecoach logo and the rest of the brand's identity draws on the company's history as an express operator, transporting gold and other goods around the US from 1852 until the creation of the American Railway Express in 1918. Through several mergers (most recently in 1998) the Wells Fargo name has endured, and it has remained the bank's complete name since the 1960s.

The brand has a reputation as a no-frills, reliable provider of financial services, which it has gained from 150 years of sound performance, especially during periods of financial instability (for example the recessions of 1855, 1933 and 1992). While the bank has not always come out of such periods unscathed, its cautious approach has served it well historically, and appears to have done so again in the current environment.

Performance of the Brand

Wells Fargo has performed extremely well in our league table. The brand increased in value by 10%, one of only 31 brands to increase in value at all in the entire 500. The sound performance of the bank, to the point where it has been able to aqcuire Wachovia bank and expand its presence to the East coast New England states of America, is yet another example of its ability to perform strongly through a downturn and capitalise on the dificulties of its competitors.

Perhaps this ability is born out of Wells Fargo's baptism of fire; the Californian banking industry imploded in 1855, a mere 3 years after the banks incorporation. The bank survived that crisis, and has managed to repeat the feat several times since.

The reputation of Wells Fargo is likely to be considerably enhanced by the credit crunch, once the dust has settled and the US economy returns to growth. The bank will have to maintain its sound performance in order to capitalise on this.

Wells Fargo Sub-brands

Wachovia

On September 29, 2008, Wachovia announced its intention to sell its banking operations to Citigroup for $2.2 billion in an open bank transaction facilitated by the Federal Deposit Insurance Corporation. However, on October 3, 2008, Wells Fargo and Wachovia announced they had agreed to merge in an all-stock transaction requiring no FDIC involvement, apparently nullifying the Citigroup deal. Citigroup alleged that this contravened an exclusivity agreement that they had with Wachovia, and the bank is still pursuing its $60 billion claims, $20 billion in compensatory and $40 in punitive damages, against Wachovia and Wells Fargo for the alleged violations.

It is unclear whether the Wachovia brand will remain, or whether its retail banks will be rebranded Wells Fargo. Our valuation indicates that the Wachovia brand has lost 85% of its value since our previous league table (falling from 14th to 73rd), while the Wells Fargo brand has increased in value by 10%. Wachovia's presence along the east coast of the USA and in Latin America, where Wells Fargo does not currently operate, also seems an enticing opportunity to expand the footprint of the brand. However, the substantial cost, the inherent uncertainty invoved with a rebrand, and the difference in service offering between the banks may prevent this from occuring, certainly in the short term.

Wells Fargo Videos

The Angel House
Boys & Girls Clubs of America
Our history: Stagecoach to Internet

Wells Fargo Sources

Wells Fargo - About Page
Wikipedia Profile
Wells Fargo - Investor Relations
My Offshore Account
Wikipedia - Wachovia

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