Wells Fargo Expands Securities

On July 6, 2009, Wells Fargo & Company's (WFC) announced its plans to expand its securities business. The company intends to put in incremental investment in the securities business that it primarily inherited when it acquired Wachovia at the end of 2008 for $12.5 billion.

The business, to be named Wells Fargo Securities, will offer a wide range of services like merger advice, stock and bond underwriting, loan syndications and fixed-income trading. With the expansion, the company will bring competition to its rivals such as JPMorgan Chase (JPM) and Citigroup (C).

We believe that the expansion will positively impact the profitability of the company and is well-timed, especially when we see some signs of rebound in the U.S. markets. This also comes as a bold move on the part of WFC when the financial services industry is not in the pink of health and a major competitor, Citigroup, is struggling.

Wells Fargo & Company is the fourth largest (in terms of assets) financial services company in the U.S., with $1.3 trillion in assets and nearly $800 million in deposits, providing retail and wholesale banking, mortgage banking, consumer finance, equipment leasing, insurance brokerage, agricultural finance, securities brokerage, trust, investment banking and other financial services.

WFC is scheduled to release its 2Q09 financial results before market open on July 22, 2009 followed by a conference call. Ahead of its 2Q09 financial results, we are maintaining our Hold recommendation on the shares.

Read the full analyst report on WFC

Read the full analyst report on JPM

Read the full analyst report on C