Wells Fargo Looking More and More Like The Old Citigroup Model (WFC, WB, C)

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Wells Fargo & Co. (NYSE: WFC) is the latest of the banking giants to look like the old Citigroup Inc. (NYSE: C) business model.  This became the case with the acquisition of Wachovia Corp. (NYSE: WB) out from under Citi’s, but today Wells Fargo is making another acquisition.  The company’s  Wells Fargo Insurance Services announced that it has acquired New Jersey-based EMAR Group, one of the nation’s largest independently owned commercial insurance agencies with offices in New Jersyey, New York, and Florida.

This insurance company has been around since 1971 and serves middlemarket and upper middle market clients as well as risk managementcustomers.  EMAR works with businesses in transportation, construction,real estate, financial institutions, and has access to specialty marketprograms including the limousine services and restaurant industries.

This will mark a key expansion for Wells Fargo on the East Coast.  Thecompany has noted its recent acquisition of Herder-Terricone Associatesin Three Bridges, New Jersey, and it noted the expansion of Wells Fargo RegionalCommercial Banking in the tri-state region.

Most people think of Wells Fargo as a depository institution.  Yet itclaims to be the fifth-largest insurance company in the world with 170 offices in 27 states and some 7,200 insurance professionals.It also notes $11.5 billion of risk premiums in in property, casualty,benefits, international, personal lines and life products.

If Citigroup could somehow take back its spin-off of Travelers, it would look more and more like the oldfinancial supermarket model it has been criticized about for theentire decade. 

Now with the brokerage becoming bank holdingcompanies, who would have ever guessed that Sandy Weill’s model wouldhave ended up being the norm.  The difference here is that Wells Fargo is one of the healthiest banks in the country.

Jon C. Ogg
October 13, 2008