In an interview with the Wall Street Journal, CEO John Stumpf said that Wells Fargo's wealth and retirement business is "suboptimized" and that he intends to grow the business as quickly as possible.
"If we could jump a curve with the right deal, that's great," Stumpf said, according to the paper.
Wells significantly bolstered its brokerage ranks with the acquisition of Wachovia over two years ago. The combined brokerage franchise, known as Wells Fargo Advisors, touts 15,000 brokers, ranking No. 3 behind Morgan Stanley Smith Barney (MS) and Bank of America-Merrill Lynch (bac).Those three players are targeting the so-called "mass affluent" segment of the population, while others, like Citigroup (C), JPMorgan Chase (JPM) and Goldman Sachs (GS), are placing a greater emphasis on high net worth individuals. >>>Read More: Morgan Stanley Mulls Smith Barney'less Future The wealth-management business has become ever more important for big banks, which need to offset revenue declines from financial reform. New rules that limit fees for debit and credit card use, interest rate hikes and proprietary trading have sapped billions of dollars from the industry's top and bottom lines. >>>Read More: Banks Up Profit Bets on the Rich But, in fact, when Wells Fargo initially announced the $15 billion Wachovia deal, management intended to get rid of the brokerage and capital markets business, believing that they didn't fit into the Wells Fargo culture. But upon further consideration, it decided to retain those operations, which are now one of the key areas for Wells Fargo's post-reform revenue growth. In an interview with TheStreet last week, David Carroll, who heads Wells' Wealth, Brokerage and Retirement segment, said, "I will tell you in our case, we are looking for the wealth management and asset management business to replace some of those revenues." But he also noted that it's difficult to acquire and retain talent and build trust and credibility with the market. Stumpf -- who has been an especially vocal critic in recent days about financial reform rules -- didn't tell the Journal what brokerages he might be interested in buying and didn't rule out the possibility that Wells Fargo might have to do things the hard way -- by building out its brokerage shop purely with elbow grease. -- Written by Lauren Tara LaCapra in New York.
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