[ Howard Haykin ]

Wells Fargo Securities unit, an "acorn" today, looks to grow.

While investment banking departments languish throughout financial services, Wells Fargo & Co. is expanding that business, which admittedly has some investors worried - particularly when they look at the bank's reputation for being notoriously conservative. 

Rather than stick to its knitting, Wells Fargo Securities believes that now is a good time to hire - according to John Shrewsberry, head of the bank's investment banking and capital markets operations.

The 4th-largest bank in the U.S. says it can earn solid returns in investment banking while taking little risk for itself.  It is focusing on services that its corporate lending customers need, such as stock and bond underwriting and merger advice. 

For investors, it is looking at areas like processing futures and swaps trades. The bank shies away from riskier undertakings like trading for its own account.

The Wells Fargo Securities Unit.   with its biggest hub in Charlotte, NC, the securities unit is relatively small now.  [C-I Note:  We're guessing that it rose up from the remnants of Wachovia Corporation, which Wells purchased during the credit crisis.] 

Yet, In a few years, the unit could account for twice as much of the firm's revenue as it does now - an estimated 10% compared to its current 5% - that, according to DB analyst Matt O'Connor.  By comparison, the percentage is closer to 20-25% at JPMorgan Chase, Bank of America, and Citigroup.

Wells Fargo CEO John Stumpf last May told an audience of investors that the bank needs to be in the business and the move was consistent with the bank's strategy to provide more products and services to its customers.

Potential Hiring.   The securities unit currently has just over 4,000 employees, less than 2% of Wells Fargo's total.  According to Shrewsberry, no specific targets for hiring have been set.  Instead, the unit has left itself with room to grow. 

A new trading floor in Charlotte is just about completed.  The facility, as we though, was part of Wachovia.  At the time it was bought, Wachovia was in the process of building a new headquarters in hometown Charlotte.  The building was completed - it is now known as the Duke Energy Center, but Wells waited until last year to continue construction.

About 1,500 traders, bankers and support staff will start moving into the building from a nearby location in December.

For further details, go to:  [ Reuters, 10/31/12 ].