Richard M. Kovacevich was Citibank's retail banking chief in 1980 when he gathered thousands of employees at Madison Square Garden for a pep talk to kick off a "Grand Slam Gift Giveaway" sales drive.

Eighteen years later, people who attended the event still remember how the crowd erupted as he strode to the podium wearing a New York Yankees uniform.

Such displays of solidarity with employees are a hallmark of Mr. Kovacevich, long considered one of banking's most personable and pioneering executives.

"He can connect with the front lines and at the same time think the big thoughts," said Robert B. Wilcox, who was marketing director at Citibank when Mr. Kovacevich worked there.

Now chairman and chief executive of Norwest Corp., Mr. Kovacevich, 54, will need all his social skills and strategic expertise as he takes the reins of Wells Fargo & Co., a premier banking name that in recent years has taken knocks for weak earnings, slumping employee morale, and a hard-edged business approach that alienated thousands of customers.

Analysts consider Norwest a disciplined, focused company that has kept its eye on the ball precisely by avoiding the megamerger frenzy that Mr. Kovacevich now has joined.

But Mr. Kovacevich insists Wells Fargo will fit into Norwest's sales- driven culture-and says he doesn't mind if it takes a while for that to happen. He said Monday that it will take three years to fully integrate the friendly merger. Wells Fargo, in contrast, tried to fully absorb First Interstate Bancorp four months after acquiring it in a nasty takeover battle.

For all his talk about moving deliberately and amiably in merging with Wells Fargo, Mr. Kovacevich has earned a reputation as one of the most demanding, sales-driven executives in the business, say analysts and people who know him.

"He has always looked for ways to change the way people think about banking," said Scott Kisting, president and chief operating officer at Citizens Financial Corp. in Providence, R.I., and the former head of retail banking at Norwest.

For starters, Mr. Kovacevich imported some vocabulary from retailing when he joined Citibank from General Mills in 1975. Bank branches, he declared, were "stores," and employees were expected to hustle to bring in business.

To entice customers into letting Citibank handle more of their business than checking accounts or home mortgages, he ushered in the idea of waiving fees for certain customers if they agreed to let the bank handle a greater portion of their financial services needs.

"He pushed management closer to the customer," Mr. Wilcox said. "This was remarkable, considering that higher-ups at Citibank thought that an empty branch was a beautiful branch."

At the same time, Mr. Wilcox says, for all of Mr. Kovacevich's touchy- feely approach, he always kept his eye firmly on the bottom line. Discounts and perks could be offered to customers that brought a lot of business, "but the word 'free' was stricken from the lexicon," Mr. Wilcox said.

Mr. Kovacevich, who jumped to Norwest as president and chief operating officer in 1986, has developed it into one of the country's largest and most successful financial services companies. Fully 71% of the company's revenues come from banking; consumer finance accounts for 18%, mortgage banking for 11%.

Spreading out revenues among such different business, Mr. Kovacevich has long held, protects the company from booms and busts in different parts of the country.

This diversification fits with the image Mr. Kovacevich and Norwest's top brass like to present, one of conservative, home-spun midwesterners. One of the major reasons Norwest had not joined the megamerger game, Norwest M&A chief John Granoe told analysts this winter, is that it was hard to justify paying big premiums that, even if they paid off in the long term, would surely hurt earnings in the short run.

But Mr. Kovacevich initiated contact with Wells Fargo chief executive Paul Hazen three weeks ago to discuss a deal. The two men, both of whom enlisted Goldman, Sachs & Co. as an adviser, negotiated a merger of equals. That allows Mr. Kovacevich to extend his empire and brand of banking without paying a huge premium to do it. And that, he said at a press conference Monday, was a good reason to do the kind of big deal that Norwest hasn't done before. "All the criteria are here and they haven't all been here before," he said.

Mr. Kovacevich said the fact that Norwest and Wells Fargo have limited geographical overlaps is also to Norwest's liking.

The hardest part about doing the deal, he acknowledged, will be uprooting himself from Minneapolis and moving to the chief executive's office in San Francisco.

"Of all the decisions related to the transaction, this was the most difficult for me," said Mr. Kovacevich, who became Norwest's CEO in 1993 and its chairman in 1995. "It affects a lot of people. Personally, I have children and grandchildren in the Minneapolis area. But we had to look at what is best for customers, and the decision was very obvious. We will have $54 billion of deposits in California. We would have $13 billion in Minnesota.

"It was the right decision to make."

In an interview last week, Mr. Kovacevich noted that firing employees to meet Wall Street's earnings expectations for a merger is not his cup of tea. "We said this five years ago: This is all about revenue, customers, and cross-selling, and it's not just about slashing and burning," he said.

"It's all about people," Anat Bird, whom Mr. Kovacevich recruited last year as senior vice president of strategic planning, said in a speech at the Bank Administration Institute's Retail Delivery Conference in December.

"I know it sounds corny, but our folks really believe Norwest cares about them, and they are right," said Ms. Bird, who credits Mr. Kovacevich with fostering a nurturing, teamwork-oriented climate with a "fair social contract."

People "are not a cost, but the company's most valuable asset," said Ms. Bird. "You can have all the information in the world, but it takes people acting on the information to create competitive advantage."

Mr. Kovacevich "is a new breed of banker," said Anthony Cluff, executive director of the Bankers Roundtable, the big-bank association in Washington of which Mr. Kovacevich is currently president. "The new group is very action-oriented, very determined to make a difference."

Mr. Kovacevich has been "very active" supporting the financial reform legislation now before Congress, Mr. Cluff said, and has developed a reputation as a perceptive thinker about new technologies.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.