Wells Fargo Chairman Dick Kovacevich has had to put his retirement on hold.
The 64-year-old Kovacevich, who'd planned on stepping down at the end of the year, will help manage the San Francisco bank's planned $15.1 billion takeover of Wachovia.
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Kovacevich has ample experience with mergers, having accomplished the 1998 purchase of Wells Fargo by Norwest, the Minneapolis bank he headed, with as few layoffs as possible and maintaining his reputation as a nice guy. He made San Francisco the headquarters of the merged bank under the Wells Fargo name.
He once told The San Francisco Chronicle, “Norwest sounds like a mispronounced airline that gives bad service.”
The announcement of the deal last week was a surprise, given that Citigroup had hammered out an agreement with Wachovia, even though most industry watchers considered Wells to be the more appropriate and expected partner.
Mystified by what seemed like Wells' decision to back away from the deal, some analysts cited Kovacevich's generally conservative approach to acquisitions. But Wells Fargo outmaneuvered Citigroup with a deal that does not seek any backing from the federal government, though it would give the company potentially billions in new tax advantages. It's not clear what role Wachovia chief executive Bob Steel would play in the combined company or how long Kovacevich would stay on.
Citigroup said this afternoon that it had stopped negotiating with Wells Fargo over a possible splitting up of Wachovia's operations, citing “dramatic differences” in possible transaction structures. Wachovia said it was “pleased” with the move and that it looks forward to completing its $15 billion sale to Wells Fargo.
Kovacevich has a history with Citi that dates back to 1975, when the company hired him to run consumer operations outside New York. Kovacevich spent 11 years at the bank, working his way up to a senior executive position. He joined Norwest after Citi executives tapped a rival to run its consumer banking operations and was named Norwest CEO in 1993.
Former Bank of America CEO Richard Rosenberg said any irony associated with Kovacevich's history with Citigroup two decades ago and the Wachovia deal is purely coincidental.
“He's an absolutely outstanding leader, very focused and hard-working individual,” Rosenberg said, also praising Kovacevich for his philanthropic efforts.
Berkeley's Greenlining Institute, which supports inner-city economic development, gave Kovacevich high marks for marketing loans to women and minority business owners and encouraging the bank to exceed its philanthropic goals in underserved communities.
“Generally we're critical of banking executives because they tend to be egotistical, sometimes arrogant and many times tend to ignore the communities that are the key to their profits,” said Robert Gnaizda, Greenlining's general counsel. “To our pleasant surprise, Kovacevich took a different view.”
Kovacevich comes from a humble background, raised in a small, working-class town in western Washington. Scouted by major-league baseball teams, he chose instead to attend Stanford University on a baseball scholarship. A torn rotator cuff ended his pitching career.
Later this month, the Bay Area Council will induct Kovacevich into its Bay Area Business Hall of Fame.
“He's taken a Bay Area institution and lifted it to international prominence, where it's now either the third- or fourth-largest bank in the country,” said John Grubb, spokesman for the council.