Wells Fargo Faces Serious Timing Issues Amid DOJ Antitrust Inquiry

The U.S. Department of Justice (DOJ) Antitrust Division has requested extensive information from Wells Fargo relating to the competitive impact of a potential takeover in 37 California markets. This inquiry raises serious questions about the magnitude of divestitures Wells Fargo may be required to make and its ability to complete a merger on a timely basis. The DOJ's request seeks information on competition in making commercial and industrial loans to small and medium-sized businesses, an area of concern for the Department.

Key Takeaways:

• The DOJ Antitrust Division has requested information from Wells Fargo regarding the competitive impact of a potential takeover in 37 California markets, including Los Angeles, San Francisco, Sacramento, and San Diego.
• Wells Fargo has proposed divestitures in only 14 markets, whereas the DOJ's request suggests that a more extensive divestiture process may be necessary.
• The DOJ has requested information on competition in making commercial and industrial loans to small and medium-sized businesses, a market often underserved by thrifts and non-bank competitors.
• Wells Fargo's management has stated that the company is on "essentially the same timeline" as First Bank System, which may be inconsistent with the DOJ's request.
• First Interstate has received no similar request from the DOJ, suggesting that its merger with First Bank System may not present significant antitrust issues.
• The DOJ's inquiry raises serious questions about Wells Fargo's ability to match the speed and certainty of First Interstate's merger with First Bank System.
• The proposed merger between Wells Fargo and First Interstate has significant implications for the competitive landscape of California's banking industry.

Statistics:

• 37: The number of California markets in which Wells Fargo and First Interstate have overlapping operations.
• 14: The number of markets in which Wells Fargo has proposed divestitures.
• 48: The total number of California markets in which Wells and First Interstate have overlapping operations.
• 2-3: The minimum number of years required to complete a merger process, as suggested by industry experts.

Sources:

• "First Interstate Bancorp Receives Request for Information from U.S. Department of Justice Relating to Competitive Impact of Wells Fargo Takeover."
• "Wells Fargo Proposes Divestitures in 14 Markets in Response to DOJ Antitrust Inquiry."
• "First Interstate Bancorp Application to Federal Reserve Board."