By Emily Glazer
Wells Fargo & Co.'s wholesale banking head Timothy Sloan
said the San Francisco-based bank expects continued growth through
acquisitions, such as buying portfolios or selectively buying
businesses.
Mr. Sloan, speaking at a financial conference Wednesday, said
the bank hopes to continue to acquire loan portfolios, whether
through the unwinding of some of General Electric Co.'s financial
businesses or elsewhere if it fits Wells Fargo's business model.
Mr. Sloan added that the bank is also keeping a close watch on
opportunities as competitors exit businesses in the U.S.
"If they fit our business model and we're comfortable from a
customer standpoint, we'd love to grow that way," Mr. Sloan said of
portfolio acquisitions. "But we don't have to do that."
Wells Fargo recently announced its plans to purchase $9 billion
in property loans from GE alongside Blackstone Group LP, which is
buying $14 billion of property loans and real estate. Wells Fargo
provided $4 billion of financing for part of Blackstone's purchase
of the loans. Wells Fargo expects the $9 billion deal to close this
quarter, Mr. Sloan said.
He said hundreds of Wells Fargo employees examined hundreds of
GE loans in that portfolio over a "short period of time" before the
sale, and the loan portfolio is performing "better than
expected."
"It was very important for [GE] to get a large transaction
closed as part of their [divestiture] announcement," he added.
"They needed to rely upon us to do what we said we'd do."
When the bank considers acquisitions such as the GE portfolios,
Mr. Sloan said it examines the business, whether the bank can add
value and if the bank can broaden relationships with the customers
involved. He said the bank also considers if other bidders are more
likely to pay "significant premiums" if they are in need of a
platform.
In response to questions, Mr. Sloan wouldn't disclose certain
details about the bank's acquisition strategy, such as its return
hurdles that a deal needs to clear to make it worth Wells Fargo's
while. He said its models aren't just based on loan pricing but
also the overall value of the customer relationships over time,
which was key in the recent GE and Blackstone deals.
"In today's low interest rate environment you could make any
acquisition look attractive, and that's dangerous," he said. "You
have to use more of a cost of funds over a longer period of time to
look at the returns from an acquisition."
Write to Emily Glazer at emily.glazer@wsj.com
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