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Wells Fargo sees growth potential in Charlotte securities hub

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DIEDRA LAIRD - dlaird@charlotteobserver.com
Traders at the Wells Fargo Trading Floor in Duke Energy Center.

Wells Fargo’s securities operation in Charlotte has been getting bigger all year as the bank pushes to grow that line of business.

The bank has been adding employees at the operation in the Duke Energy Center even as it cuts other staff in Charlotte – specifically in the mortgage business. In two announcements over the past five weeks, the company said it will lay off 430 people because of a slowdown in home loan refinancing activity. Just last week, 150 people received layoff notices.

But the Charlotte securities operation, already the largest such hub for Wells Fargo, is poised for growth, bank officials say.

Wells Fargo Securities, made of investment banking and capital markets services, employs about 2,000 in Charlotte. That’s roughly double the number in New York, its next-largest securities hub, the bank said.

John Shrewsberry, head of Wells Fargo Securities, said that as the business grows, it “will result in net head count growth in Charlotte.” He declined to speculate on numbers.

The company’s securities business offers its products and services to medium and large corporate clients. Some of those services include mergers and acquisitions advice, debt underwriting and sales and trading activities with institutional clients, such as pension funds.

This year, Wells Fargo Securities grew its Charlotte payroll by roughly 150 people, the San Francisco-based bank said. Wells Fargo says its overall employment in the Charlotte region is about 20,000.

Employment in the Charlotte securities hub has grown since Wells Fargo’s purchase of Charlotte-based Wachovia, a deal announced five years ago next month. Through that purchase, Wells not only gained Wachovia’s bank branches, but it also entered investment banking. The Wachovia acquisition also allowed Wells to expand its capital markets services.

Bank of America’s U.S. investment banking employees are mostly in New York, although it does have investment banking employees in Charlotte. Bank of America declined to disclose the number of those employees in Charlotte or New York.

Wells Fargo expects Charlotte to keep its status as the company’s biggest securities hub for the foreseeable future, Shrewsberry said.

“Once you have a center of gravity for lots of activities, it’s likely to continue to sustain itself,” he said.

‘An up-and-comer’

On the fourth and fifth floors of the Duke Energy Center in uptown Charlotte – the largest trading floors in all of Wells Fargo – hundreds of trading staff sit or stand at row after row of computer monitors, studying data and talking to clients. The bank has smaller trading floors in New York and San Francisco.

The Duke building was supposed to be Wachovia’s new headquarters and house its trading operations. Wells Fargo completed the construction of the trading floors, relocating to the space its Charlotte-based investment banking and capital markets employees who had primarily worked in the One Wells Fargo building.

The two floors combined can hold up to 1,200 traders and other employees, Wells said. Roughly 1,000 work on the floors now.

Investors and analysts are paying close attention to all the expansion of Wells’ investment banking operation – and how it’s competing.

Wells doesn’t generate the kind of investment banking fees collected by its peers, which include major competitors such as Goldman Sachs, JPMorgan Chase & Co. and Citigroup.

In the second quarter, Wells Fargo made $538 million in investment banking fees. While that was up from $291 million a year ago, JPMorgan reported $1.7 billion in fees in the quarter, more than three times Wells’ figure.

“Wells is very much an up-and-comer that’s growing in this business, that’s taking market share,” said Joe Morford, an analyst for RBC Capital Markets.

“It’s, in the grand scheme of things, a relatively new business for them, but it’s an important growth opportunity for the bank.”

In a report issued this month, RBC said Wells Fargo’s investment banking business is on track to generate $1.5 billion to $2 billion in revenue this year, “roughly half that of some of its big bank competitors, suggesting there is still a significant opportunity to take market share.”

Hiring outside of Charlotte

As Wells has grown its Charlotte securities operation, it has sometimes had to go outside of the region, such as to New York, to find trading staff.

Such jobs require specialized expertise that’s more easily found in places like New York, which has lots of people working in trading, bank officials said.

“As we’ve looked for more seasoned people with specific experience, they tend to reside at some of the larger banks that are outside the Charlotte area,” said Cronin McTigue, a markets division manager who works on the fourth floor of the Duke building.

McTigue said that as he has hired traders, salespeople and tech personnel for his unit, roughly three-quarters have come from the New York area. The remaining one-quarter, he said, is mostly from Charlotte, adding that the local talent is strong. “You obviously have some very good schools in North Carolina and the general area.”

McTigue said it’s important to get potential hires to tour Charlotte.

“We try to essentially make sure their whole family gets to see Charlotte,” he said. “It’s much easier to recruit people and bring good people in when they’ve had the chance to actually see the city.”

Roberts: 704-358-5248; Twitter: @DeonERoberts
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