While many of his peers have been embroiled in one scandal or another, Wells Fargo & Co. (WFC
) CEO Richard M. Kovacevich, 59, has kept his bank safely out of the fray. Forget risky telecom loans or big-league investment banking business. Kovacevich doesn't stray beyond the basics: retail and wholesale banking and mortgage lending.
Kovacevich, who became head of San-Francisco-based Wells Fargo after it merged in 1998 with Norwest Corp., has concentrated on selling such unglamorous services as payroll management for small businesses and checking accounts and credit cards for consumers. Mortgage refinancings have also been a pot of gold. The bank racked up $221 billion worth of new mortgages during the first nine months of 2002, blowing past the $202 billion it lent in all of 2001. That helped Wells Fargo, the fifth-largest bank in the U.S. in assets, post a 19.69% return on equity in the first three quarters, beating other big banks. Net income climbed 11% to $4.24 billion.
Kovacevich's core strategy is to focus on selling as many products as he can to each customer. He figures that's cheaper than trying to bring in new clients who might not be as loyal. So far, Wells Fargo customers sign up for an average of four products each, double the industry average. And Kovacevich is willing to sacrifice a little profit margin. "The more business you do with us, the better deals you get," says Kovacevich, a former pitcher who had an offer from the New York Yankees out of high school (he chose an athletic scholarship to Stanford University instead). Now he's trying for eight products per customer. If he succeeds, he'll be in a league of his own.
KEY ACCOMPLISHMENTS
-- Sells an average of four products to each customer, double the industry average
-- Net income expected to grow an estimated 22%, to about $5.5 billion in 2002
Get BusinessWeek directly on your desktop with our RSS feeds.
Add BusinessWeek news to your Web site with our headline feed.
Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.
To subscribe online to BusinessWeek magazine, please click here.
Copyright 2003, Bloomberg L.P.
Printer-Friendly Version
