Is Wells Fargo poised to become the next BB?
Seeing how Charlie Scharff is investing more and more resources in their CIB arm, and how quickly is WF growing in Investment Banking vs other institutions in decline (CS, UBS, DB) could WF be considered a BB in maybe 7 or 8 years?
The bank has consolidated itself in the top 10 for IB fees for several years especially driven by loans and DCM
It's poaching a lot of top talent from Credit Suisse for their coverage teams
M&A was one of their weakness, but last year they made it to the top 10 of advisors in the US, they have been providing advisory in important deals such as the Kroger / Albertsons or the Broadcom / VMWare, and now they poached the Head of Technology M&A of Morgan Stanley
Their asset cap will be lifted at some point, allowing them to be much more aggressive with lending
The way I see it, if they improve their ECM franchise (difficult at the current moment) and they expand outside the US and Canada, they will have nothing to envy to bottom BB names.
Simple answer to your question: No.
Not saying it's not a franchise on the rise however.
salty wells fargo interns are giving you MS lmao
Wouldnt consider its IB franchise to be outgrowing DB or UBS at all
I would disagree with this. DB has been consistently struggling to maintain market share in the US - take a look at any league table or news headline about their IB business.
Where is a good source of news to find out about their IB business?
Maybe if they can stop getting into lawsuits over malpractice in their other divisions
Hey now, breaking securities laws is part of what defines a BB
The only league table where Barclays is number 1
the forbidden league table:
https://www.nasdaq.com/articles/bofa-tops-fines-blacklist-with-us$82bn-…
We all know BB means breaking bad
No way. So long as their keep using their shitty placement system, I'll never consider them a BB.
What’s their placement system?
You apply to the platform and then go through a placement process after accepting your offer. Unlike most other banks, a fair amount of coverage groups are located in charlotte ~(50%) as well as the entire DCM and LevFin teams. While most people are interested in NYC there's a good chance you end up in CLT. They'll tell you on networking calls and through the recruitment process that if you want NYC you can get it. During the summer internship, it's the same story where they stress the flexibility of the platform, and fit with location won't affect your return offer. But it's an unspoken rule you shouldn't ask for NYC in CLT as the groups are obviously worried about retaining you. There's a pretty high correlation with interns that pursued NY not receiving return offers in my class. Anecdotally only 2-3 of the 65ish interns in Charlotte in my class were able to switch to the NYC office.
Their franchise is weaker than both DB and UBS and I don’t think it’s outgrowing either especially not DB right now. If they keep on the pace they were on COVID in the future, maybe there’s some chance but that’s a pretty big if imo.
Yes, they both have a solid name, but they've been bleeding senior talent for years. From looking at league tables, DB's deal value this past year was far below its peers.
UBS is still at a higher position on the tables than WF, but it's also important to note that WF lacks a global presence. The bank's position of #8 / #9 is purely from US deals.
Not a BB, good firm though
Wells Fargo will never be a Bulge Bracket with its current logo and colour scheme… it’s just not prestigious enough
the true criteria
Wells Fargo Sans is god tier tho
iykyk
People have been suggesting this for like a decade. The answer is no, not really. They're kinda in the boat that BofA was in prior to the financial crisis / buying Merrill. Go read Ken Lewis's statements from ~2006 and he talks about how they were getting their ass kicked in IB in spite of their attempts to build that side of the business. Scharf is smarter than Ken Lewis and has a better understanding of IB, but still. They aren't great in M&A, don't have a good ECM franchise, and their LevFin is focused on the more DCMish corner of the market. Obviously they have a good DCM business.
They would need to buy an investment bank and I doubt they would be allowed and there aren't many targets - maybe the future CS First Boston, DB's US operations, UBS's US operations, Jefferies. That's about all that would move the needle.
I don't think any other bank will be considered a BB without M&A
Yeah, honestly even after a good year in M&A for WF coming out the pandemic it still remains to be seen if that can actually keep that momentum beyond the year where everyone did well.
Sure they’ve hired some good guys but it’s still the same MDs under those new group heads that for quite some time have not been able to beat out the competition so I don’t really see how it materially changes unless they either poach a metric fuckton of better MDs or acquire a different M&A platform
Imagine Jefferies being BB rofl
they’re saying if WF bought Jeff then WF would have M&A capabilities of a BB. Not that jeff is a bb
Jefferies is more of a BB than WF lmao
On top of that you really need a good international presence to be a BB otherwise you’re just a regional player even if the US is by far the largest market.
I don't see it gaining that much traction, but it will be interesting to see what individuals can do and if they can overcome the Company's issues.
I can only speak to MM and UMM funds, CEOs, etc., but the brand is heavily tainted. WF isn't viewed favorably, has little M&A presence, provides horrendous client service in other divisions (corporate / commercial banking) and won't going to be winning sponsor mandates over EBs and MMs.
Wells ain't competing with MMs. They don't want volume. You can keep your
Keep my what? Marketing budget instead of spending it on desperate, pathetic ads on Bloomberg TV?
This perception is a bit outdated and very group dependent. I know of at least 3 coverage groups that have strong relationships with UMM and MM firms (including my firm), which has led to a number of sell side mandates this past year. From talking to senior folks at my firm, it seems that a lot of the weaker leadership at Wells is largely gone. Take a look at press releases to see who they've hired recently, it's quite an impressive list.
Surprised to see so many negative comments here - it seems like people are judging strongly by past reputation. Deustche Bank's US IB practice has been a sinking ship for many years, with a majority of senior talent being poached away. UBS is definitely in better shape, but the bank is not looking at a bright horizon. At the end of the day, the "bulge bracket" title is a 20+ year old term, used to refer to the largest full-service banks with an international presence. Realistically speaking, 3 out of 4 of the lower bulge bracket banks are a shell of what they were in the past.
WF does have the full-service aspect, but the franchise is almost entirely US-based. As a result, in the traditional sense, Wells Fargo does not fit the definition of a bulge bracket bank. With that said, WF has had massive traction with M&A over the past two years, and with the recent hires I would only expect this to grow. Bulge bracket or not, it's likely for WF to continue gaining market share and compete with the likes of Citi or Bofa.
I genuinely am not trying to be inflammatory/offensive, but is there anything pointing to WF's ability to maintain that portion of M&A business in the future outside of the senior hires? WF's performance in the last two years is commendable but that was a very different market than what can be expected in the future and while some of the new seniors will undoubtedly bring relationships of their own, the average MD at WF is still the same guy who the majority of strategics and sponsors get a pitch from and then go ask the dude at CVP/JPM/GS/etc whats actually right. I'm just not sure I see a path for groups like TMT especially given how weak the SF group is or HC given that group is largely still ramping up even with the senior hires - those guys can only do so much when the rest of the franchise is what it is historically.
There may be uncertainty here, but that's the case for any bank on a growth trajectory. The bottom line is that the lower bulge bracket banks (UBS, DB, CS) are a fraction of what they were 20 years ago, and WF is quickly catching up to take their place.
Again, WF is not going to be competing with banks like GS or EVR anytime soon, but the expectation is that they will be in a position to compete with the other US balance sheet banks (BofA, Citi).
People seem to value titles and legacy a lot on this website. It's important to look past that and see where senior folks are heading.
Wells Fargo is barely an IB LOL
Look at the recent hires speaks for itself
No.
As some people is mentioning above the list of recent hires is no joke. We are talking about real deal makers.
To reach the BB status they need to establish an international business as Wells Fargo is purely an American Institution at the moment. I don’t think they have a franchise in London or Asia.
They 100% have a London office I walk past it everyday
congrats on your wells fargo offer brother
WF employee here…I believe international expansion is not on the radar until we are where we need to be in the US. There is more than enough business here and we are capturing more each year. They are only hiring seniors now who have legitimate relationships and have been letting go/allowing to retire/giving job titles that are a demotion to those who haven’t performed. YTD announced M&A I believe were T10 at the moment, number 7 last I saw. I think we’re ahead of Jefferies/CS and others in that realm. Short time frame but still an apples to apples comparison.
The thing is, the investment bank has been neglected for a long time and mismanaged. The people leading the bank now albeit only recently are smart, talented bankers who have ran top groups on the street (former group head of MS TMT is now our co-head of M&A, former group head of TMT CS is now our group head, same for FIG, this is very common across most groups.
At the end of the day, it’s an enjoyable place to work and we’re paid very fairly. Excluding boutiques I would say we were near top of street. If you look at the other 10T firms in M&A league tables (most of whom were above us), we were paid in some cases multiples of what they were at the senior associate+ level.
Don't listen to the above posters.
If MDs with YEARS of experience and the credibility they bring (MS M&A guy and CS TMT for example) see something promising and join WF, there must be something brewing. They could literally go anywhere they want but chose WF. Don't let analysts tell you otherwise.
congrats on your wells fargo offer brother
i'm dead
Tell me you work at WF without telling me you work at WF.
Structurally, I think one of the differences between BBs and Wells is the size of their distribution platform (S&T). Will Wells continue being a leader in debt financing? Absolutely. Can they leverage their balance sheet to get Buyside advisor credit on M&A or JLA roles on IPOs? Maybe to an extent. But, the disconnect here is that Wells does not have nearly as scaled as an ECM/Distribution platform to go out and win active IPO mandates at same level as other BBs. It’s not just hiring a few top bankers, you truly have to have same level of scaled investment in distribution, which is hard to do if you aren’t simultaneously providing institutional sales and trading to major asset managers/hedge funds at scale. It’s all connected. To be in BB-class, ECM league table is first difference for Wells. If we look at M&A, I think there’s also an under appreciation on this thread for just how difficult that business is to win, specifically disrupting current market leaders. Yes your balance sheet can get you Buyside credit. It’s a whole other challenge to get the first call as true advisor on the largest deals. GS, MS, and JPM are the leaders of the BBs. Remaining BBs compete very hard and spend a lot of money on MDs to try to gain share, but M&A is a very hard business. In many cases, companies go to the boutiques then bring in BB for financing and also give them M&A credit even if they don’t really advise.
For “bulge bracket” status, keep in mind it’s not BofA that became a BB, it’s the fact they acquired Merrill Lynch. It’s not Citicorp that was a bulge bracket, it was their merger with Salmon Brothers. Same thing with CS, it’s FirstBoston that was the bulge bracket, not the balance sheet lending side.
In this day and age, unless you’re working in capital markets or S&T, I don’t think any of these things are all that meaningful. If you’re in M&A, best place to be is really at the boutiques. For larger banks, it’s more team and industry specific rather than broader institution.
Really appreciated your take!
congrats on your wells fargo offer brother
Don't understand the hype behind UBS/DB on this thread, especially DB. Wells is probably in position to overtake UBS in the coming years. Already seems to be happening with DB.
From talking to friends at all three banks, the IB business seems less promising every year for UBS/DB, but quite the opposite for Wells. As another poster said, those recent hires really speak for themselves.
We already are in my opinion and the gap will grow wider. We’re more looking to overtake CS this year, UBS and DB are not really milestones at this point
WF has an investment banking strategy that is meant to be driven by their corporate lending clients. Bankers are directed to expand wallet share with those corporate clients. Bringing in new clients is not rewarded, or encouraged.
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