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Banking industry

Norwest and Wells Fargo Announce $34 Billion Merger

Strategic Insights

— 2 min read

The Norwest Corporation and Wells Fargo & Company announced a $34 billion merger deal yesterday, creating a giant banking franchise with $191 billion in assets. This move is part of a trend of blockbuster unions in the banking industry driven by stalled revenue growth and increased competition from mutual funds, brokerage firms, and credit card companies. The combined bank, which will be based in San Francisco and retain the Wells Fargo name, is expected to be completed in three to four months.

Key Takeaways:

  • The merger will create a banking giant with $191 billion in assets, making it one of the largest banks in the country.
  • The combined bank will be led by Norwest's CEO, Richard M. Kovacevich, with Wells Fargo's CEO, Paul Hazen, serving as chairman.
  • The merger is expected to put pressure on smaller banks to merge, with analysts predicting a significant culture clash and potential loss of smaller customers.
  • The deal is worth $396.875 a share, with Wells Fargo shareholders receiving 10 Norwest shares for each Wells share they own, and will own about 52.5% of the combined company.
  • Norwest's decentralized operations and Wells Fargo's centralized approach may present challenges, with some analysts predicting a loss of smaller customers.
  • The combined bank will have 90,669 employees, 5,777 branches, and 19.9 million customers.
  • The merger follows a trend of large banking deals, with Citigroup, BankAmerica, and Chase Manhattan Corporation among the top three banks in the country.

Statistics:

  • The merger is worth $34 billion, with each Wells Fargo share worth $396.875 and each Norwest share worth $36.8125.
  • The combined bank will have $191 billion in assets, with $96.1 billion in assets from Norwest and $94.8 billion in assets from Wells Fargo.
  • The banks have combined revenues of $13.51 billion and $12.16 billion, respectively, and net income of $1.35 billion and $1.16 billion, respectively.
  • The merged bank will have 58,255 employees from Norwest and 32,414 employees from Wells Fargo, for a total of 90,669 employees.
  • The bank will have 3,847 branches from Norwest and 1,930 branches from Wells Fargo, for a total of 5,777 branches.
  • The bank will have 19.9 million customers from Norwest and 10 million customers from Wells Fargo.

Sources:

  • Norwest Corporation press release, no date
  • Wells Fargo & Company press release, no date
  • "Big Deal" table, New York Times, no date
  • "Banking Shuffle" table, New York Times, no date
  • Keefe, Bruyette & Woods, "Banking Industry Overview," 1997
  • Bloomberg Financial Markets, no date
  • Company reports, no date

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