With the US middle market struggling to access trade credit from international banks, Wells Fargo Bank is ready to provide this additional liquidiy. Shannon Manders reports.

The merger of Wells Fargo Bank and Wachovia Bank was completed in March this year.

The continued systems and operational integration of the two banks seeks to preserve and develop the best aspects from each of their business models. As part of this initiative, Wells Fargo is in the process of rolling out its new trade finance structure across the legacy Wachovia offices in the eastern US, having unplugged HSBC from its trade bank model.

Bradley Hardy, senior vice-president of the global banking team at Wells Fargo in New York, notes that the merger has been fully complementary, as it has taken a fairly robust financial institution (FI) trade platform in Wachovia, and married it with a slightly different corporate relationship-orientation in Wells Fargo.

“The result is we’re providing more touches to the corporate relationship managers. We’re providing more coverage to them, and they see the products as being enhanced over what either institution had before; legacy Wells because it has a greater product set, and legacy Wachovia because there are more people talking to these relationship managers about what the product set can do for their clients.”

Originally most active in the midwest and the US west coast, Wells Fargo’s global banking team is now expanding eastward, opening five east coast offices in New York, Philadelphia, Charlotte, Atlanta and Miami. These offices are responsible for marketing and delivering the bank’s complete range of international trade finance products across the entire spectrum of clients.

Mike Schmittlein was appointed executive vice-president of this newly-established east region, and Gordon Hough joined the bank in late March as senior vice-president, structured trade finance.

“We’ve recruited quite a few people to staff these offices on the east coast, as part of Wells Fargo’s belief in the importance of trade, and also as a differentiator in terms of the way that we approach our corporate clients,” says Schmittlein.

Hough’s new role is to support the five east coast offices in a structured trade finance capacity, and as such is a product partner for those offices, which have a much broader mandate than just trade.

Hough explains that the new business model in the east mirrors the Wells Fargo business model for how the bank supports its clients involved in international commerce: “Whereas before, the Wachovia model emphasised trade finance largely through its extensive FI network of relationships, the Wells Fargo model includes a focus on the corporate client base. All the offices have integrated the trade specialists – both trade services and structured trade – into these geographic offices which include a relationship component as well as a trade product component.”

Although both Wells Fargo and Wachovia historically had structured trade finance staff, the Wells Fargo team was based in the midwest and on the west coast, and the Wachovia team was more oriented towards the FI client segment, and according to Schmittlein, would only “reactively support corporate customers on a deal”.

The new structure synergises each of the banks’ activities, as Schmittlein adds: “So now we can work both ways – we have a team to pursue our corporate clients in the various segments, and Gordon will work with the structured trade people on the FI side, so that we can work to cover both sides of the transaction.”

Market demand

Wells Fargo sees robust demand for new bank providers of trade finance. Hardy puts this down to larger international counterparts withdrawing from the mid-market for reasons ranging from capital constraints to changes in strategic direction.

“The result is that, when we come along, as a large financial institution, with a fairly strong international capability, there’s a real interest to bring us into the banking mix in that middle-market area.

“We’re a new provider with a large balance sheet – we’re open for business. We’re looking to make loans. There’s a lot of interest.” GTR

Jane Hennessy, executive vice-president, marketing, strategy, cross-sell and international personal banking, speaks to GTR about the merger process, and why she believes the cultures of the two banks will be “a good fit”.

GTR: What was the reason for the Wells Fargo/Wachovia merger?

Hennessy: I think we, Wells Fargo, were always looking for attractive acquisitions, and we thought the cultures would be a good fit. And if you look at Wachovia’s footprint compared to Wells Fargo’s, there was very little overlap – I believe there were only eight overlapping states.

GTR: What were some of the challenges faced in the consolidation process?

Hennessy: We had to complete regulatory filings in 31 different jurisdictions, nine of those with branches. That was a massive undertaking, because you have to prepare whatever is required in that jurisdiction – and it varies – and then submit documents, etc. And it happened in quite an aggressive timeframe. In addition to that we had to rebrand various online platforms – we also rebranded more than 4,000 forms.
It was very much a team effort. We had a command centre up and running for a few days around consolidation weekend, and we were able to close that out sooner than anticipated.

GTR: Can you outline the team structure as it stands now?

Hennessy: At the enterprise level, we have John Stumpf, who is the president and CEO. There are four major division heads: David Hoyt is the head of wholesale banking (which encompasses the international group, as well as trade finance); Carrie Tolstedt is the head of community banking; Mark Oman heads up home and consumer finance; and David Carroll is head of wealth brokerage retirement services.

GTR: What is the current business strategy?

Hennessy: Our strategy remains as it has always been – we want to serve all our customers’ financial needs. We have our vision and values, which we’ve recently republished. And we have our 10 strategic initiatives.