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Monday, June 8, 1998 Published at 13:56 GMT 14:56 UK

Business: The Company File

Wells Fargo, Norwest to merge

Wells Fargo makes its move

In another massive US banking merger, Wells Fargo has announced it will merge with Norwest Corporation, creating a super-regional bank in the Western United States with $190bn assets.

The merger would create a holding company worth $34bn, with 90,000 employees and nearly 6,000 branches serving 20 million customers. It would be the sixth largest bank in the US, with a major presence in California, Texas, and the Midwest.

[ image: Norwest's soaring share price has helped the merger]
Norwest's soaring share price has helped the merger
The companies said they expected $650m in savings eventually, but would take a $1bn initial charge. The company headquarters will be in San Francisco, and Wells Fargo chairman Paul Hazen would chair the merged group. Norwest CEO Richard Kovacevich would become chief executive, in a merger of equals.

California Dreaming

The move would also strengthen Well Fargo after its California rival Bank of America merged earlier in the year with Nationsbank to form the country's largest domestic bank network.

Wells Fargo is the oldest bank in California, which opened in l852 as a banking and express firm, providing a stagecoach service, mail delivery and the safeguarding of gold during the California gold rush. It recently has been struggling to assimilate another California bank, First Interstate Bancorp, which it acquired in l996.

Norwest has been one of the more successful of the US regional banks. Based in Minneapolis, Minnesota, it is the nation's largest mortgage underwriter, and also a major player in consumer finance, with over 1,500 outlets nationwide.

A Wave of Mergers

With the government regulators no longer opposed to inter-state banking, a wave of mergers has swept the US banking sector in the last year. In the biggest deal, Citibank merged with insurer Traveller's which also owns brokerage and investment banking services. Other regional banking groups, like Banc One and First Chicago, have also announced mergers recently.

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