When will Wells Fargo be considered Bulge Bracket?

dogboo's picture
Rank: Gorilla | 520

Even though Wells Fargo's number 10 in the league tables:
http://markets.

I rarely hear anyone talking about them on WSO, I see more people talking about about Jeffries and Houlihan.

Why isn't Wells Fargo considered bulge bracket? Especially when Wells Fargo is expected to even further expand its IB services in the coming years.

Even shareholders of Wells Fargo can see this(whether for positive or negative reasons is another topic):

http://www.bizjournals.com/denver/news/2012/04/16/...

Comments (19)

Apr 17, 2012

JUST A MATTER OF TIME

Apr 17, 2012

I am long WFC in my portfolio. Git er dun!

Apr 17, 2012

Maybe being based out of San Fran has something to do with it? They aren't that notorious in the IB industry, do alot of commercial banking.

    • 1
Apr 17, 2012

WF is going places. They are beating out these other banks that everyone worships. It is only a matter of time before you see them being a hot shot firm that people want to go to. They are huge in Charlotte with decent size offices in NYC and San Fran. I know they recruit a lot in the southeast for CLT and cost of living in CLT is dirt cheap.

They will keep climbing and then get noticed more.

Flying Higher and Higher

Apr 17, 2012

The FT graph sums it up: WF is a big player in bonds/levered loans/, but not in M&A. Since most WSO guys are interested in M&A first and foremost, not surprising they don't think of WF very quickly.

Side note: WF is doing pretty well in the league tables for LevFin: http://about.bloomberg.com/pdf/gslc.pdf

Apr 17, 2012
triplectz:

The FT graph sums it up: WF is a big player in bonds/levered loans/, but not in M&A. Since most WSO guys are interested in M&A first and foremost, not surprising they don't think of WF very quickly.

Side note: WF is doing pretty well in the league tables for LevFin: http://about.bloomberg.com/pdf/gslc.pdf

This is a good point. That said, I don't see a good reason why the bulge banks should dominate M&A. You don't need balance sheet to advise on a deal - M&A is in a sense very specialized consulting. The basic function of a broker/dealer is to underwrite capital markets issuance, and this is where the money is actually at from the BBs' perspective. The Rothschild/Lazard independent M&A advisor model makes a lot of sense for actually running transactions.

The only force I can think of keeping M&A advisory with broker/dealers is their ability to discount capital markets services to build relationships and land M&A mandates. But even so, companies go over to the independent elites for the bigger or more complex deals.

Apr 17, 2012
Sandhurst:
triplectz:

The FT graph sums it up: WF is a big player in bonds/levered loans/, but not in M&A. Since most WSO guys are interested in M&A first and foremost, not surprising they don't think of WF very quickly.

Side note: WF is doing pretty well in the league tables for LevFin: http://about.bloomberg.com/pdf/gslc.pdf

This is a good point. That said, I don't see a good reason why the bulge banks should dominate M&A. You don't need balance sheet to advise on a deal - M&A is in a sense very specialized consulting. The basic function of a broker/dealer is to underwrite capital markets issuance, and this is where the money is actually at from the BBs' perspective. The Rothschild/Lazard independent M&A advisor model makes a lot of sense for actually running transactions.

The only force I can think of keeping M&A advisory with broker/dealers is their ability to discount capital markets services to build relationships and land M&A mandates. But even so, companies go over to the independent elites for the bigger or more complex deals.

You're right in that it's not necessary to run a balance sheet to advise on a deal, but in many cases it is a necessary pre-requisite. Having commercial relationships already in place goes a long way in building trust with an institution (the kind of trust needed to garner IBD business).

Furthermore, not all BB's (namely, the pure form ibanks like GS and MS) actively use their balance sheets as a business model (i.e. to make money in the commercial banking sense), but all of them, including GS and MS, are willing to participate in supporting bank loan activity because otherwise a potential client would just go to a universal bank like JPM or Citi or BAML to advise on a deal. What GS does then is that it participates in underwriting the loan, but then immediately offloads it to banks with a more traditional commercial banking business, usually taking a loss along the way, in the hopes such participation shows a willingness to help out a potential client when that mulibillion dollar merger comes along.

In other words, if I'm a F500 company and i need a loan today, and you decline to participate, then why would I hire you over any bank that did participate when I need a deal adviser at some time in the future?

Of course, independence does have its advantages, which is why you also see elite M&A boutiques.

Apr 17, 2012

They are a long way from being considered a BB. Crushing mortgage and debt deals isn't really the same thing. Definitely moving in the right direction though.

Apr 17, 2012

It's also about name branding. E.g. Nike beats out Asics, even though the quality difference is probably nill. JPM, Goldman are legacies in IB. Hard to overcome their commercial banking name (WF that is)

Apr 17, 2012

I like my Asics way better than my Nikes. They can take the image, I'll take the capital gains :)

Apr 17, 2012

they need to change the name. wells fargo is too folksy.

Aug 1, 2013

lol i know that i am blowing up this thread but this is funny. what about houlihan lokey?

Apr 17, 2012

Things are slow to change, people here still dislike BAML even there are 2nd in that table with a solid M&A segment.

Apr 20, 2012

Bump.

Aug 1, 2013
ogofnyc:

lol i know that i am blowing up this thread but this is funny. what about houlihan lokey?

Feb 16, 2014

Any updates on anyones thoughts? A little over a year later and now they're number 9 :http://markets.ft.com/investmentBanking/tablesAndTrends.asp

Feb 16, 2014
dogboo:

Any updates on anyones thoughts? A little over a year later and now they're number 9 :http://markets.ft.com/investmentBanking/tablesAndTrends.asp

Why do you keep posting the wrong league tables? Wells Fargo is not top 10, that's hilarious. Maybe for commercial banking as others have noted... The correct league tables are here (from WSJ): http://graphicsweb.wsj.com/documents/INVESTMENT/InvestmentBankQuarterly_1007.html

    • 1
Feb 16, 2014
dogboo:

Any updates on anyones thoughts? A little over a year later and now they're number 9 :http://markets.ft.com/investmentBanking/tablesAndTrends.asp

LOL @ 9% from M&A

Feb 16, 2014
Comment