Wells Fargo Aims to Outshine Bank of America in Its Own Back Yard

Not content with cornering the mortgage-writing market, Wells Fargo (NYSE: WFC  ) is expanding its investment banking business. In a body blow to peer Bank of America (NYSE: BAC  ) , Wells has established an investment banking arm in B of A's hometown of Charlotte, North Carolina, where the larger bank had previously tried -- without success -- to set up its own shop.

Investment banking comeback?
The investment banking business has taken a hit since the financial crisis, and Morgan Stanley (NYSE: MS  ) recently announced cuts of 15% to its Asian section as part of its overall downsizing of 1,600 jobs.

On the other hand, JPMorgan Chase (NYSE: JPM  ) noted late last year that investment banking is stepping up, and its latest earnings report showed net revenues increased 21% year over year. Goldman Sachs (NYSE: GS  ) made a good showing as well, presenting net revenues up 64% from the year-ago quarter.

Getting its fair share
Wells Fargo saw a 30% uptick in its own investment banking fees from 2011, and is positioning itself to take on a larger presence in the sector. According to Bloomberg, the bank has already moved some of its 900 workers to the new digs in Charlotte, just minutes away from Bank of America's former location. The former CEO of B of A, Ken Lewis, put up the building several years ago to house approximately 550 employees, but Lewis lost his taste for the business early on -- until he decided to buy Merrill Lynch, that is. Many of the Charlotte traders were moved to New York after the purchase of Merrill.

On the face of it, Charlotte doesn't seem like the obvious choice for an investment banking enterprise. But Wells inherited a banking base there when it bought Wachovia in 2008, and there is a large contingent of workers with investment banking experience living in the city. Another plus is that the area is less hectic than New York and offers a lower cost of living.

One Fool's take
Wells isn't deterred by the Bank of America experience and seems to be taking a laid-back approach when it comes to staffing its new headquarters. Analysts feel the bank won't have a problem finding skilled workers who would be happy to move to less-expensive Charlotte when Wells is ready to expand.

Will Wells Fargo succeed where B of A failed? It would seem so, particularly since the bank is much more committed to the idea than Lewis apparently was. The bank has instituted a training program for its investment bankers, hiring a consulting firm to teach employees the art of the deal, with an eye toward bringing in more business. That sure sounds like dedication to me.

Dedication indeed. Wells Fargo's commitment to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.


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