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.

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