Wells Fargo/Wachovia
The merger was one of the most publicized that was triggered by the economic recession that hit the United States in 2008. In the wake of the 2008 recession, the financial regulators began engaging mergers experts to strategize for capital infusion as a way of saving collapsing companies. The challenges of Wachovia were evident in April 2008 when it reported its initial quarter loss. The loss was caused by the loans it had acquired in purchasing its vital assets such as Golden west financial. The bank later-filed application for bankruptcy then acquired by Wells-Fargo, resulting in the development of North America most far-reaching flow of financial services. The paper will touch on the necessity of the merger based on how Fargo Wells will organize itself and its expectation shortly.
In organizing the new company, the company will consider replacing the existing inconsistent business model and the dented culture. The company had been associated with a series of scandals that have continuously hindered the bank from expanding. Its staff members participated in opening millions of non-existence accounts. In doing so, they were able to charge mortgage clients exorbitant fees and compelling loaners to take useless insurance covers (Smith, 2020). Based on the past mergers and acquisitions, Fargo wells is expected to design a new corporate organization. The new company is expected to replace the top entity executives. Also, it will consider empowering existing sovereign business units. It will also consolidate the role of regulatory compliance in its new leadership structure.
In 2-5 years after the merger, Fargo Wells will have made inroads to the disgruntled customers, thus creating a reliable base. The company approach of inspiration is likely to boost the entity by restoring confidence with the customers. The company is aware of the needs of the customer apart from financial services a quality that lacks in big banks. The company will have attracted people of all ages that fail to trust big financial institutions. The company will also have fully implemented technological initiatives such as Digital cash, data exchange agreement and blockchain critical for improving customer experience through mobile banking. The new company will have implemented technology-based methods and user-friendly experience, attracting younger customers. The company will also have introduced the hybrid model that will enhance and boost creativity in human being. In coming years the bank will have narrowed the gap with the big four as more customers will have joined the institution.
I think the merger was a great idea based on the challenges the bank was exposed due to the deregulation of the financial institutions. For Wells Fargo, it was the opportunity to diversify the institutions given that the Wachovia customers will hang on to the new company. Therefore, based on the change of the regional banking institutions merger was a wise move to conflicts. Also, with the integration ongoing, Wells Fargo has reported a rise in profits and revenue. More than 21% of the Wells Fargo clients continue to benefit from rival Wachovia company, especially during the time for the financial crisis. For instance, the business owners lending has increased amid emerging banking regulations and collapsing of the mortgage business. Based on the past mergers, as the decision by the two boosted skills and expertise level due to replacements that inject new blood in the company labour force. The Wells Fargo was able to tap Wachovia fun base by retaining Wachovia brand
Guinan, P. J., & Parise, S. (2018). The Social Leader: Influencing the Landscape at Wells Fargo.
Smith, A. D. (2020). Wells Fargo and Trust Issues: Impact on Financial Banking.