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NEW YORK (
Wells Fargo(WFC - Get Report) is now a solidly growing Wall Street player, after the nation's largest mortgage lender saw its strongest earnings growth from investment banking and wealth management businesses.
better-than-expected second quarter earnings report, Wells Fargo reported a 34% year-over-year rise in investment banking revenue and a 29% rise in net income from its wealth management businesses.
Top and bottom line gains in both units helped to stabilize Wells Fargo's earnings as its traditional lending businesses continued to show tepid growth amid a still struggling economy.
Wells Fargo's rising investment banking earnings also reflect burgeoning business the bank gets from its largest shareholder; Warren Buffett of
The bank's Wall Street-based earnings were likely bolstered by fees it earned in advising and financing Berkshire Hathaway and
3G Capital's$28 billion acquisition of ketchup maker
Heinz(HNZ) in February.
While Wells Fargo didn't disclose fees it earned on the deal, the acquisition closed on June 7, allowing the bank to book the fees during the second quarter.
Only Wells Fargo and
JPMorgan(JPM - Get Report) were hired to advise and finance Berkshire and 3G's deal for Heinz, which stands as one of the largest acquisitions of 2013. In 2009, Wells and JPMorgan played a similarly exclusive role in underwriting financing for Berkshire's acquisition of
Burlington Northern Santa Fe.
Prior to earnings, some analysts forecasted businesses traditionally dominated by Wall Street powerhouses such as
Goldman Sachs(GS - Get Report) and
Morgan Stanley (MS - Get Report) would help Wells Fargo's earnings.
JPMorgan banking analyst Vivek Juneja calculated prior to the earnings release that Wells Fargo's leverage loan volumes rose 123% quarter-over-quarter. Berkshire Hathaway and 3G capital financed their acquisition of Heinz with $14.1 billion in loans; however, some of the debt carried investment-grade ratings.
According to data provider
Dealogic, Wells Fargo held a top-10 revenue share in the global investment banking business in the first half of 2013, surpassing standalone firms like
Jefferies and international conglomerates such as
Royal Bank of Canada(RBC),
BNP Paribas(BNPPQ) and
Wells Fargo's acquisition of
Wachovia in 2008, meanwhile, continues to drive the bank's rising retail brokerage and wealth management performance. Client assets in its retail brokerage business grew 9% to $1.3 trillion, while its wealth management unit saw assets grow 3% to $203 billion.