In its push to cut costs, Wells Fargo Bank appears to have found a way to close its Asian offices while still providing its California business customers with access to international banking services.
The San Francisco bank said Wednesday that the Hongkong Bank of Hong Kong will handle most international business for Wells Fargo customers and take over its office in the British colony.
Wells Fargo also said it will put its Tokyo office up for sale and has reached an agreement to sell its offices in Seoul and Singapore to Bank of Hawaii.
Wells Fargo business customers will be able to use the 1,300 offices worldwide of Hongkong Bank, the largest bank in the British colony and principal subsidiary of the Hongkong & Shanghai Banking Corp.
Concentrating on California
Routine international transactions, such as foreign currency exchange, will still be handled by Wells Fargo's California offices, and the bank will retain one person in Hong Kong.
The Hongkong Bank will refer consumer business from its San Francisco and Los Angeles branches to Wells Fargo branches, but it will continue to do corporate banking through its offices here.
Carl E. Reichardt, chairman and chief executive of Wells Fargo, said the agreement was "the first of its kind for a major U.S. bank and a forerunner of how global banking will be done in the 1990s."
Some big U.S. banks, such as Citibank and Bank of America, are unlikely to abandon their own offices abroad. But Wells Fargo's strategy in recent years has been to concentrate on its California operation and to trim unrelated lines of business that were not highly profitable.
"Wells doesn't have the critical mass of business to justify the branch network that they have (abroad)," said Thomas K. Brown, an industry analyst at the New York investment firm of Smith Barney, Harris Upham. "This is very consistent with what we see of Wells Fargo, which is getting out of businesses where profitability is inadequate."