Is Wells Fargo & Co. looking to make a deal for a mutual fund company?
Dick Kovacevich, its chairman and chief executive, told a group of analysts Thursday that it wants 100% of every customer's financial services business.
"We see ourselves ... as much more than a bank," Mr. Kovacevich said at the Bank Analysts Association of Boston conference. "Our focus is selling all the financial products a customer needs."
His comments led some observers to speculate that the San Francisco banking company is considering a big-ticket move into mutual funds, where it has relatively small operations.
David Hendler, an analyst with Credit Sights, said that Wells "is interested in always offering their retail customers a product that they need."
Wells has dipped its toe into mutual funds but lags well behind other large banks, such as Citigroup Inc., J.P. Morgan Chase & Co., and Wachovia Corp.
"That's where they have to put more emphasis," Mr. Hendler said. Because Wells "is very stingy" about paying a high premium, the current environment provides a great buying opportunity.
Embroiled in regulatory problems and investigations, some mutual fund companies, such as Putnam Investments LLC, could be purchased at a substantial discount, he said. "Putnam's in a distressed situation right now, and they need to be in stronger, more stable hands."
Mr. Hendler noted that in the past few weeks investors have pulled almost $10 billion out of Putnam, which has fired its CEO.
The Marsh & McLennan Cos. unit is a target of the investigation into market-timing practices. Late last month the Securities and Exchange Commission and Massachusetts regulators charged it with civil securities fraud by. Marsh & McLennan also owns a consulting arm and an insurance brokerage.
The idea of a Wells-Putnam deal is more than a little speculative. Several analysts agree that Wells is intent on increasing assets under management, but they argued that its strategy would continue to focus on buying smaller firms.
Despite its regulatory woes, Putnam - the fifth-largest mutual funds firm, with roughly $272 billion of assets under management - would cost a lot of money, analysts said.
Wells has a track record of small deals. Last year it bought Sife in Walnut Creek, Calif., which managed $712 million of assets. As of June 30, Wells Fargo Funds Management LLC had over $73 million of mutual fund assets under management.
Burt Greenwald of the Philadelphia consulting firm BJ Greenwald Associates said banks want to have their clients' primary financial relationship and must offer a broad range of products to do so. "The addition of a major mutual fund organization would give [Wells] added strength and added resources in ... investment management."
Such a purchase would also bring Wells institutional and wealth management, high-net-worth clients, and expanded distribution, he said.
Jason Goldberg, an analyst with Lehman Brothers, said he does not expect Wells to depart from its small-deal approach but that buying a mutual fund firm "is clearly a possibility."
A spokeswoman for Wells said it "would never comment or speculate on acquisitions." A Putnam spokeswoman said it does not comment on rumors.
