Wells Fargo & Co. chief executive Richard Kovacevich spied William Osborn, chairman of Northern Trust Corp., across the dining room in New Yorks Pierre Hotel Thursday, and beckoned him over.
The Chicago-based banker was about to speak at a Goldman, Sachs & Co. investor conference a task Mr. Kovacevich had performed Wednesday. Half-jokingly, Mr. Kovacevich pleaded with Mr. Osborn not to repeat the sort of warnings Bank of America Corp. vice chairman James H. Hance Jr. had given Wednesday afternoon, sending financial shares tumbling.
Everything was fine after I was done, Mr. Kovacevich told Mr. Osborn. Shares of most financial companies were, in fact, on the rise Wednesday before Mr. Hance said Bank of Americas earnings would be lower than expected next year as the giant digests $1.1 billion of chargeoffs this quarter.
Dont you drop a bomb, too, Mr. Kovacevich admonished. Mr. Osborn laughed and assured him that Northern Trust would not disappoint.
Chief executives at companies such as Wells and Northern Trust are feeling pretty confident these days, their companies relatively unscathed by the deteriorating credit quality and slowdown in capital markets that are affecting others. Perhaps none is so confident as Mr. Kovacevich, who was about to complete the integration of his biggest deal, the takeover by his former company, Minneapolis-based Norwest Corp., of Wells Fargo in San Francisco.
We have the best strategy, Mr. Kovacevich said in an interview Thursday. And the most successful companies are moving toward our model.
The Norwest-Wells Fargo integration was expected to be completed over the weekend, six months ahead of schedule, with systems conversions in Washington, Oregon, and Idaho.
Wells Fargo continues to expand, in keeping with Mr. Kovacevichs mantra, we want 100% of your business. But he has diligently avoided the hot businesses of the late 1990s investment banking and syndicated lending which are now causing problems at rival institutions.
Problem loans are mounting industrywide, and though Wells has not been immune, the increases there have been moderate, Mr. Kovacevich said. He declined to offer specific fourth-quarter numbers.
The companys tally of nonperforming loans may be mitigated by its small involvement in the syndicated loan market. We arent interested in it unless we are going to be getting a lot more business from taking part, he said.
Meanwhile, participation in syndicated loans has forced many banking companies, including Bank of America, First Union Corp., and Wachovia Corp., to acknowledge big losses in recent months.
Investment banking is another area in which Wells is treading lightly. The company is just getting its first taste of the business, having acquired First Security Van Kasper in its October purchase of Salt Lake City-based First Security Corp.
Mr. Kovacevich called that deal fortuitous because Van Kasper is small enough to give Wells a sense of the business without posing enormous risk. Integrating a significantly large investment banking activity would be difficult to do, he said. Van Kasper allows us to see how [the business] would work. It gives us the experience that will allow us to determine the degree to which customers want these services.
And he said he thinks the companys approach to Internet banking. The one thing we didnt do was have a separate channel, he said. We did not do a Wingspan, we did not build silos, we did not build a separate organization and talk about taking it public. We have integrated it, not separated it.
Wells has announced 39 transactions since the Norwest takeover was announced in May 1998. These 39 deals have added $40 billion of assets to the company, a 50% increase from Wells size just before the Norwest deal.