Wells, Norwest merger impacts LV

Steve Green

Monday, June 8, 1998 | 10:06 a.m.

Wells Fargo Bank promises to get it right this time.

Still smarting from its fouled-up and unfriendly 1996 takeover of First Interstate Bank, Wells Fargo & Co. said today it's merging with Norwest Corp.

"We learned (from the first Interstate merger)," Wells spokeswoman Marilyn Taylor said.

Today's deal values Wells Fargo at about $34 billion. Wells stockholders will receive 10 shares of Norwest common stock for each of their Wells shares.

The combined bank will be based in San Francisco, where Wells is headquartered, and keep the Wells Fargo name. Norwest is based in Minneapolis.

Wells and Norwest are big players in the Las Vegas market, where Norwest has 28 traditional branches and Wells has 53 regular and in-store branches. Wells has not disclosed its Nevada asset totals, Norwest says it has $2.8 billion in local loans and other assets.

Competing head-to-head with branches just a few blocks apart at several locations in Las Vegas, the two banks will consider redundant branches for consolidation or closure. Nationwide, Wells and Norwest are promising $650 million in cost savings by the third year of the new operation.

Taylor said there is no certainty that any Las Vegas branches will close or that anyone locally will be laid off.

But Kirk V. Clausen, head of retail banking in Las Vegas for Norwest, said the combined bank will ensure it doesn't have excessive overhead by operating branches a few blocks apart.

Customer service considerations will play the major role in deciding which branches to keep or close, he said.

Clausen said Norwest employees are disappointed to lose the Norwest name.

"But we pick up a great distribution system," he said.

Wells' problems in absorbing First Interstate are legendary: Customers both big and small complained of service problems stemming from the delayed integration of two computer systems, some took their accounts elsewhere. First Interstate customers lost their check guarantee cards. Wells was tagged in the press for faux pas after faux pas. Girls scouts were charged service fees for cookie deposits -- fees First Interstate had always waived. Senior citizens lost their unconditionally free First Interstate checking accounts.

Taylor said Wells and Norwest are committed to avoiding these problems. Unlike the First Interstate deal, this merger is friendly. And the computer integration will be accomplished over three years.

"We're really excited. We think the kind of network we'll put together with Norwest will be phenomenal," she said.

Nevada Sen. Richard Bryan, who has complained past bank mergers are hurting Nevada, today indicated he wasn't overly concerned about the Wells-Norwest merger.

That's because it involves two banks headquartered out of state as opposed to a locally owned bank being taken over; and because small independent banks are doing a good job of meeting the modest credit needs of individuals and small businesses.

Still, Bryan said the merger will leave one less big lender for large Nevada businesses like hotel-casinos.

"And there could be some Nevadans that lose their jobs because of it," Bryan said.

Taylor said Wells Fargo will continue to be a major gaming industry lender.

"It's a very important part of Wells' commercial business," she said.

The combined bank, should the deal receive regulatory and shareholder approval, will be the nation's sixth largest with $191 billion in assets and 20 million customers. The deal was a surprise in that U.S. Bank had been considered the most likely Wells suitor.