Wells Fargo & Co. grabbed the most trading and dealmaking market share in years, a key milestone for Chief Executive Officer Charlie Scharf’s quest to build the fourth-largest US bank into a more formidable Wall Street player.
The firm’s share of the capital markets pie among the big six US banking giants hit 5.7% in the second quarter — the highest since the fourth quarter of 2019, when Scharf took over as CEO. It was the only firm to report jumps in investment banking, equities and fixed-income revenues individually, albeit from much smaller bases.
The trading results “reflected the benefit of our investments in technology and talent, which had allowed us to broaden our client franchise and generate more trading flows,” Chief Financial Officer Mike Santomassimo said last week. He and Scharf also touted some recent big-name banking hires including Jeff Hogan, formerly of Morgan Stanley, as co-head of global mergers and acquisitions.
Charlie Scharf, chief executive officer of Wells Fargo & Co.
Scharf has sought to build Wells Fargo’s presence on Wall Street as part of his plan to move the company past a series of scandals and bolster profitability. He started by splitting the corporate and investment bank into its own unit reporting directly to him, and executives have since been leaning harder on existing C-suite relationships to win more mandates. Last year, the firm scored a spot among the top 10 advisers on mergers and acquisitions for the first time ever.
Wells Fargo’s second-quarter share of capital markets revenue compares with 4% a year ago.
There’s certainly more room to grow: the $1.9 billion in total investment-banking and trading revenue that Wells Fargo earned is just a fraction of what its competitors brought in. JPMorgan Chase & Co., the biggest Wall Street bank, earned $8.6 billion.
Still, Wells Fargo’s top brass has long seen the growth push as a years-long effort. The bank remains under a Federal Reserve-imposed asset cap limiting its size to its end-of-2017 level, and Scharf has repeatedly said risk and control work is his top priority. In the meantime, the Fed’s restriction makes it harder to grow in businesses that require a lot of balance sheets, such as trading.
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