The wheels started to turn early this year on the Wells Fargo-
Norwest merger when the top executives of the two banks met for
breakfast.
Norwest Chief Executive Officer Richard Kovacevich has known his
Wells Fargo counterpart Paul Hazen for a decade or more, and the two
met on one of Kovacevich's regular visits to meet California
investors. In the banking industry, ``everyone talks with everyone
else,'' Kovacevich said.
Then following the recently announced mergers of
Citicorp-Travelers Group, NationsBank-BofA and Banc One-First
Chicago, Kovacevich initiated more earnest discussions with Hazen
last month.
``We went over our visions of the future and strategic
advantages,'' he said. ``Then about two weeks ago, we brought in our
presidents to talk with their systems and financial people and run
some numbers.''
Refreshed by his first full night's sleep in three days,
Kovacevich commented yesterday in an interview with The Chronicle
about how the merger with Wells Fargo came about, and his plans for
the merged bank.
Much has been made of the two banks' supposedly different cultures
-- that Wells is centralized and focuses more on technology than
people while Norwest is decentralized and more high-touch than
high-tech. But Kovacevich, who will move to San Francisco and become
CEO of the combined bank, disagrees.
``Our business models are different,'' he said in a telephone
interview. ``But I would argue that our culture and how we make
decisions is the same: You do what is best for your customers, your
stockholders, your people -- not for your ego or personal desires.''
COMPLEMENTARY STYLES
He acknowledged that Norwest, with many more rural customers than
Wells Fargo, provides ``more face-to-face contact because that is
what the majority of our customers wanted.''
While Norwest ``does community banking better than anyone else''
and was recently ranked most-admired super-regional bank by Fortune
magazine, Kovacevich said, ``Wells is the best in the country in
providing alternative delivery channels, including online banking and
supermarket branches.'' (Wells has more than 900 such branches
compared with 40 for Norwest.)
Kovacevich talked about ``micro-marketing'' and delivering
different services even in different parts of the same city,
depending on the needs of its different customers. Norwest leaves
major marketing decisions to regional presidents serving its 16
states.
But it remains to be seen whether that sort of decentralized
decision-making will be the way things are done at the new Wells
Fargo. But it seems likely because Kovacevich will be CEO and his
closest assistant, President Leslie Biller, also is moving to San
Francisco to be in charge of merging the various businesses.
Meanwhile, Hazen will become chairman and Wells President Rod Jacobs
will focus on integrating systems.
Another sign that Kovacevich's philosophy may reign is that
Norwest is printing up another 30,000 copies of his ``Sharing the
vision, living the values'' philosophic guide for distribution to
Wells employees in the next week. Many of Norwest's 58,255 team
members (as workers are called) carry it with them as a business
bible.
NO REST FOR NORWEST CHIEF
It has been a busy few days for Kovacevich.
Last Saturday night, he grabbed a Northwest Airlines flight to San
Francisco after securing the approval of the Minneapolis-based bank's
board of directors to merge with Wells Fargo.
About 7:30 p.m. on Sunday, after the agreement to combine
operations in 21 states to create the seventh-largest U.S. bank was
approved by BofA's directors, he, Hazen and a few other top managers
took off for New York.
After meetings with bank analysts and a press conference Monday at
the Plaza Hotel, Kovacevich returned to Minneapolis at midnight. Then
at 7 a.m. Tuesday he met with major investors, including American
Express Financial Advisors, and the Minnesota media.
In other merger related news yesterday, both Wells and Norwest
were criticized for the merger move. Two Wells Fargo shareholders
filed suit in Delaware Chancery Court to block the merger with
Norwest because they charge Wells could have gotten a higher price if
the bank had solicited other offers from U.S. Bancorp or other
potential suitors.
Norwest offered a 9 percent premium for Wells Fargo's, based on
Norwest's closing price last Friday. But that premium has disappeared
since both Norwest and Wells Fargo shares declined on Monday and
Tuesday.
