Wells Fargo Financial, the consumer finance subsidiary of Wells Fargo & Co., is going where fewer and fewer dare to tread, announcing Thursday a deal to boost its automobile lending business by nearly one-third.

The Des Moines-based consumer finance company said it bought $900 million of managed net receivables and the business relationships of Flagship Credit Corp. of Philadelphia. The deal increases the assets of Wells Fargo Financial Acceptance - the auto lending unit of Wells Fargo Financial - to $2.5 billion.

Terms of the transaction, which was finalized Thursday, were not disclosed. All 330 employees of Flagship are now Wells Fargo employees.

Over the past two years, a number of banks and other financial institutions have scaled back or exited automobile lending and leasing, as pricing has compressed lending margins and flattened the value of lease residuals. This year Union Bank of California said it would wind down its $1 billion indirect auto lending portfolio after it decided pricing had become unfavorably low.

And auto leasing, which has been more severely affected by a glut of vehicles in the used car market, has caused several banking companies, including Bank of America Corp. and Bank One Corp., to report charges and write-downs in their portfolios.

Still, analysts said that expanding its auto lending business would appear to bode well for Wells Fargo, particularly because its predecessor, Norwest Corp., had an established record as a consumer lending institution.

(Norwest Corp. of Minneapolis bought San Francisco-based Wells Fargo & Co. in 1998, taking its name and headquarters. Wells Fargo Financial is the new name for Norwest's consumer finance subsidiary, Norwest Financial.)

"Certainly, the auto lease business has been under a tremendous amount of pressure," said Jennifer Thompson, an analyst with Putnam Lovell Securities. But auto lending "is a relatively low risk kind of proposition - they can be disciplined because it's not part of the growth drivers," for Wells Fargo overall, she said.

The deal would also appear to be another example of parent Wells Fargo moving to expand in an area just when the market is the least attractive for these business lines. The company, which has shown it loves a bargain, has been scooping up credit card and mortgage portfolios over the past year as many other financial institutions have been getting out of the sectors.

Earlier this year, Wells Fargo Financial Bank bought the $400 million Visa and MasterCard portfolio from beleaguered Conseco Finance Corp. More recently, it signed an agreement to acquire $1.2 billion of that firm's vendor leasing businesses.

Flagship brings the Wells Fargo auto lending unit into three new states - New York, Virginia, and Maryland - bringing the total to 38.

Wells Fargo Financial Acceptance makes up 20% of the assets of Wells Fargo Financial, which contributed just 6% to the parent's business line earnings in the third quarter. Wells Fargo Financial Acceptance, one of the businesses that the parent company operates on a national basis, has 184 "banking stores" in the United States and more than 30 dealer service centers where it provides indirect auto lending, according to spokeswoman Judy Corcoran. It does not engage in auto leasing.

The transaction also marks a departure from consumer finance by a Japanese firm. In the late 1990s, following Japan's banking and financial crisis, several large Japanese corporations scaled back in these businesses. Fuji Bank, for example, spun off its U.S. consumer finance arm, Heller Financial, but retained a 52% ownership stake.

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