Wells Fargo planning investment expansion

Move allows No. 4 bank to compete with bigger rivals.

Wells Fargo, rarely seen as a major force in the world of trading and deal- making, aims to expand its investment bank in coming years.

It’s part of a strategy CEO Charlie Sch a rf has been developing since taking over the banking giant 14 months ago, according to senior executives.

The push would take the fourth-largest U.S. bank a step closer to emulating some of its biggest rivals, including Jpmorgan Chase, where Scharf spent more than a decade before running Visa and Bank of New York Mellon.

Inside Wells Fargo, managers say they intend to build more presence on Wall Street, where the firm ranks ninth in capital markets and deal advisory, by focusing on business l i nes and i ndustries where it already has credi bilit y. That would t ranslate, for example, to providing more underwriting and merger advice to corporate clients, but also lending to hedge funds looking to ramp up bets.

“We, obviously, on t he i nvestment- banking si de don’t have the same market share that we have on t he commercial- banking side,” Jon Weiss, head of the corporate and investment- b a nki ng b us i ne s s , said in an interview. “The opportunity that we have is to narrow that gap.”

Scharf has been running t he San Franci s co - based company with a mission to overhaul operations after scandals eroded earnings and led the Federal Reserve to slap a cap on the bank’s assets, now at about $ 1.92 trillion. So far, executives haven’t detailed their ambit i ons f or t he i nvest ment bank asi de f rom general comments that it has potential.

Even with the cap in place, managers see ways to earn more from the division. The need for doing so became all the more apparent amid the economic shocks of 2020, as rivals with larger trading operations pulled in billions of dollars in revenue from a flurry of market activity, offsetting t heir potential losses on loans. Wells Fargo’s stock tumbled 44% over the year, the worst performance among the nation’s largest banks.

Weiss spent 25 years at JP Morgan and its predecessors before joining Wachovia in 2005, just a few years before its sale to Wells Fargo. He eventually rose to lead Wells Fargo Securities, as the investment bank was then known, from 2014 to 2017. The company’s leaders t hen assigned him to run its wealth and investment- management unit.

When Scharf arrived, he moved Weiss back to the investment- banking business.