KONA, HAWAII - Wells Fargo & Co.'s chief executive said he wants to expand its share of the $2.7 trillion financial services industry in this country but is unlikely to get there through a big insurance or asset management acquisition.
"We've looked at insurance companies, but we're not interested," said Richard M. Kovacevich, president and chief executive of San Francisco-based Wells Fargo. "We think we can expand in asset management without acquisition."
Brick-and-mortar banks are a different story, however. Mr. Kovacevich said that Wells Fargo was still interested in expanding into five states within its geographic reach where it does not have a banking presence already, and he saw no reason for the bank's acquisition pace to slow, despite widespread investor unease with bank deals.
The remarks came during and after a speech Mr. Kovacevich gave at the annual meeting of the California Bankers Association, which was held last week in the Hawaiian Islands.
Mr. Kovacevich was careful to quash any speculation that he intended to combine with a big East Coast bank. This attitude does not come from "a dislike for the East," joked Mr. Kovacevich, who rose through the ranks of Citibank's consumer bank before joining the former Norwest Corp. of Minneapolis. "We just think the greatest opportunity in the world is in the West and Midwest," he said.
A merger to form a coast-to-coast operation, a la Bank of America Corp., is also unlikely. "We don't have any interest in being a national bank," he said.
Mr. Kovacevich cited his now-familiar strategy that distribution is the key to revenue growth. His reasoning: Even when a bank has the leading market share in a state, its share of the broader financial services market is still only around 3%. That share is something Wells, by cross-selling a variety of retail and small-business products, hopes to enlarge.
Insurance and asset management are two areas of focus. Combined, revenues from Wells Fargo's existing insurance and asset management operations currently make up 15% of the company's revenues. But acquisitions in these areas are unlikely.
Mr. Kovacevich cited "lousy returns" from the insurance business and the fact that only a handful of potential acquisition targets would add to Wells Fargo's distribution capability. The high prices extracted for asset management firms make acquisitions in that market equally unattractive, he said.
Separately, Wells Fargo said Monday it would create 950 jobs in the Salt Lake City region after completing its pending acquisition of First Security Corp.
Wells Fargo said 600 of the jobs would be created in a new call center to support its Internet services group, which currently has centers in Westlake, Tex., Concord, Calif., and Minneapolis. The call center will be located in a facility that is already partially occupied by First Security. Another 350 jobs would be created in computer operations and other back office support functions.
