By Emily Glazer 

Wells Fargo & Co., the largest bank in the U.S. by market value, has been rewarded for keeping its business simple. Now it is slowly creeping into more complex--and riskier--territory.

While many rivals retreat from risk amid regulatory pressures, the bank is expanding into a range of businesses a step removed from its long history as a Main Street lender. Among the initiatives: ramping up its investment-banking unit, bolstering trading assets and building up some overseas offices.

Last year, Wells Fargo reported $1.71 billion in fees from investment banking, up 77% from 2010, according to data provider SNL Financial. Wells Fargo's investment bank will get a boost when the lender closes its deal with Blackstone Group LP and others to buy a $26.5 billion portfolio of office buildings and commercial real-estate debt from General Electric Co. Wells Fargo bankers advised on the deal, which was announced Friday.

New frontiers offer the prospect of higher growth, given that Wells Fargo is already No. 1 in U.S. mortgage banking and a big player in retail banking. But forays further afield are tricky for the 163-year-old San Francisco bank, which has historically avoided Wall Street businesses.

Investors have applauded its conservative approach: Its shares have grown nearly 70% over the past five years, more than 30 percentage points more than its closest big-bank peer, J.P. Morgan Chase & Co.

As any bank including Wells Fargo "gets more complex, it always makes investors more nervous," said Paul Condrat, a portfolio manager at Great Falls, Mont.-based Davidson Investment Advisors, which owns nearly 300,000 Wells Fargo shares. "We really need to see how well they're managing through it when times get a little bit tougher."

It isn't just investor perception at stake. Big banks that are more complex such as J.P. Morgan and Citigroup Inc. may be required by regulators to set aside more capital to guard against recessions or deep losses. That would depress their profitability versus simpler lenders like Wells Fargo.

So far, Wells Fargo's push into investment banking hasn't caused problems with regulators, in part because it is still small in the area relative to the other five big banks. For 2014, Wells Fargo had $1.83 billion in U.S. investment-banking fees, ninth after leaders J.P. Morgan with $4.17 billion, Bank of America Corp. with $3.71 billion and Goldman Sachs Group Inc. with $3.12 billion, according to data provider Dealogic.

Wells Fargo's moves show it has the latitude to push into businesses that other banks have de-emphasized due to tougher regulations and past mistakes. In the past several months, Citigroup has said it plans to exit consumer operations in more than 10 countries overseas, J.P. Morgan sold its commodities unit and Morgan Stanley moved to sell several commodities businesses.

This year, Wells Fargo has collected 5.2% of all U.S. investment-bank revenue, which include advising companies on selling shares, bonds and mergers and acquisitions. That is more than Wall Street fixtures such as Credit Suisse Group AG and Deutsche Bank AG. Wells Fargo's share of the investment-banking pie is now the seventh-biggest among banks tracked by Dealogic, up from ninth in 2014.

"In five years, they're going to be a major investment bank, at least in the United States," said J.P. Morgan Chairman and CEO James Dimon in February 2014.

How big an investment bank Wells Fargo should have is a subject of debate. Ken Usdin, a bank analyst at Jefferies Group LLC, said Wells Fargo needs to ensure that the unit doesn't grow so big that it imperils the bank's steady earnings growth. Investment-bank earnings tend to be more volatile given market swings.

Investment banks also face the danger of being pushed by clients into areas they don't know well or where they have to take too much risk to win a lucrative fee.

The bank's executives say Wells Fargo's steps are measured. "We drive faster and safer with a seat belt and air bags," said Chairman and CEO John Stumpf in a recent interview.

In recent years, the bank enlisted former chairman and CEO Richard Kovacevich to explain to employees and clients the new investment-banking push. Mr. Kovacevich spearheaded Wells Fargo's deal during the financial crisis to buy Wachovia Corp., which included its investment bank as well as a major commercial bank.

After a speech Mr. Kovacevich gave to employees January in New York, investment-banking chief Jon Weiss opened up the questions by asking: "What do you think of investment banking?" Mr. Kovacevich responded that he supports the unit, though he has been cautious historically about the business because he views many investment bankers as taking too much risk.

In an interview, Mr. Kovacevich added: "It's amazing to me, five years after" the Wachovia deal, that employees are "still asking the question" if Wells Fargo will stay committed to the unit. "We've walked the talk....but people still want to hear it," he said.

The bank is sticking to what Mr. Kovacevich calls "normal" activities like underwriting debt and equity, not higher-risk trading activities or businesses that would attract flashier financiers.

Nevertheless, in trading, a still-smaller area for Wells Fargo that complements investment banking, the bank has increased assets since 2009 by 82% to $78.3 billion at the end of 2014, compared with an 8% increase at Bank of America, whose trading assets stood at $278.9 billion.

Since the financial crisis, the lender has been able keep expanding the investment bank in part because its other businesses in lending and branch banking have proven less volatile and complex than competitors with larger trading operations.

That makeup has helped Wells Fargo spend less time in the regulatory penalty box. The bank has paid about $10 billion in fines, settlements and other costs related to the financial crisis, for example, less than half what J.P. Morgan has paid and less than one-seventh what Bank of America has paid.

To make Wells Fargo more attractive to multinational companies, the quintessentially American bank has taken some baby steps toward foreign markets. In January, the bank began lending in Singapore. Last year Mr. Stumpf traveled to Munich for client meetings for a week, the longest time he has been in Germany, and Wells Fargo officials visited the firm's Dubai office, opened in 2013.

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