Wells Fargo (NYSE:WFC) is looking to bulk up and expand its investment banking operations in order to better compete against its peers, Bloomberg reported.
That means underwriting more equity and debt offerings, and advising companies on mergers and acquisitions. While Wells Fargo has all of these capabilities, the bank has never been seen as much of a player in the space.
Wells Fargo, according to Bloomberg, ranks ninth in terms of U.S. investment banking market share and is well behind JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C)-- three of the "big four" banks in the U.S.
For the nine months ended Sept. 30, investment banking fees made up about 5.8% of Wells Fargo's total non-interest income.
"One area where we note that we are under-penetrated relative to some of our competitors is on the financing front," Jon Weiss, who leads Wells Fargo's corporate and investment bank division, told Bloomberg in an interview. "So whether that's repo financing or equities financing, prime-services-type financing, those are areas that there's no question we have significant upside in."
The bank plans to ramp up these operations up by leveraging existing relationships it already has on the commercial side with middle-market companies.
While investors seem to be weary of banks that rely too heavily on investment banking, there is no doubt it has helped large banks like JPMorgan Chase and Bank of America bolster earnings during the pandemic, especially as traditional lending operations have struggled.
The move is also one that Wells Fargo can begin to execute on while operating under its $1.95 trillion asset cap because investment banking does not require the bank to expand its balance sheet.