Norwest-Wells Fargo merger plans said to be progressing smoothly

Phil Levine

Wednesday, Oct. 27, 1999 | 11:04 a.m.

Les Biller, chief operating officer of Wells Fargo bank, wants his Nevada customers to know he won't be involved in their day-to-day banking.

Ironically, Biller traveled to Las Vegas to drive that point home. In town to mark the completion of the Nevada merger between Wells Fargo and Norwest Corp., Biller pledged that banking decisions would remain in the hands of local personnel.

"How do we succeed and carve out the market we want? Our plan is to 'out-local' the national banks and 'out-national' the local banks," said Biller. "We will beat the big guys by providing quality service and decisions made by local officers. And we'll beat the community banks by providing customers with a wide range of products and services and the assets of a $200 billion bank."

Wells has taken a gradual approach to integrating the two banks; Nevada and New Mexico are the only two states where the merger is now complete. Wells doesn't expect the nationwide integration to be completed until 2001.

It's been almost a year since Wells Fargo & Co. announced plans to merge with Norwest; following the union, the bank retained Wells' name and its San Francisco-based corporate headquarters. Biller's pledge to maintain local control of Wells' Nevada operations was a not-too-subtle swipe at rival Bank of America; since its merger with Charlotte, N.C.-based NationsBank, some customers and analysts have criticized B of A for a more centralized approach to banking.

In the wake of the Norwest merger, Biller finds himself chief operating officer of America's seventh-largest bank with assets in excess of $205 billion.

But more than just total assets changed. As with many other large bank mergers, branch closings soon followed Wells' union with Norwest. Earlier this year, the two banks announced plans to consolidate their 42 Nevada branches down to 21 offices. The bank targeted formerly competing branches in close proximity to each other. Of the 21 closings, 11 were in Southern Nevada and 10 were in the northern part of the state.

Still, Wells officials have repeatedly stated their intent not to lay off staff as a result of the merger. In fact, Biller said his company believes "it serves both our shareholders' and customers' interests" to retain all qualified personnel.

"We understand that we can have a brilliant strategy, but if we don't have the quality people needed to complete that strategy it won't matter," he said. "If we were to cut staff, we would experience a one-time savings of any substance in (operational) costs. But in the long-run, it's generating revenue growth that will make the difference in how this company succeeds. And that requires quality personnel."

To that end, Biller said Wells Fargo guaranteed all its Nevada staff that "if their job performance was of a high standard, they would still have a job after the merger was complete."

Illustrative of his commitment to local concerns, Biller said that since the merger's announcement he spends "50 to 60 percent of my time talking to our people throughout the country. We recognized that a problem arising from big mergers -- which can be seen as a seismic event for employees -- tends to be a lack of focus." Addressing employee concerns helps to bridge that "seismic" gap of understanding, he said.

However, more than merger-related issues are at the forefront in today's banking community. Biller also addressed customer concerns arising from proposed new banking legislation allowing financial institutions, insurance and securities companies to share products and customers.

"Financial institutions have a unique responsibility to our customers," he said. "They (customers) have a right to trust that we will use their personal information responsibly. I believe we can share that information in a way that can benefit our customers."

Earlier this year, U.S. Bank agreed to pay $3 million to state governments and charities following a state investigation of its marketing practices using customer information. Biller said it was important "not to criticize 99 percent of those (banks) who act properly because of the action of 1 percent." He said his bank would meet its "fiduciary and ethical responsibilities" regarding customer privacy, and that a current investigation by 20 state attorneys general -- include Nevada's -- would find the same.

Unlike other mega-mergers -- including Wells' previous takeover of First Interstate Bank -- analysts appear to be pleased with this union.

"So far, it (the Wells-Norwest merger) seems to be going fairly well," said Joe Morford, bank analyst with San Francisco-based Dain Rauscher Wessels. "And I agree with the plan to do a gradual conversion (of bank systems), although investors may become impatient as time goes on. One of the big questions really is 'Did Wells' learn its lesson from the mistakes made during the merger with First Interstate?"

Morford said he expected the merger would also result in an increased push in multi-product marketing.

"If all they got from this merger were some cost savings, it would be a real disappointment," he said. "But I expect you'll see a real push in marketing a full range of products. That's an area Wells had been weak in, and with this merger there's definitely a lot of room for (sales) growth."

Biller agrees.

"We certainly believe that Norwest's strong position as a mortgage lender combines well with Wells' success as the largest Internet bank in the country," he said. "Wells' has more than 1 million Internet customers and is growing at more than 100,000 new customers per month. But we also intend to examine new products, allowing us to provide customers one-stop shopping for their financial and related needs."