Chairman of Wells Fargo Discounts Interstate Rivalry

Wells Fargo Chairman Carl E. Reichardt on Tuesday called the advent in 1991 of full interstate banking in California “the non-event of the financial decade.”

The head of the San Francisco bank, in a speech in Los Angeles and in comments to reporters afterward, said most of the effects in added competition that interstate banking will bring to the state are already here.

He noted the increasing presence here of Japanese and other foreign banks, which control nearly one-third of California’s banking assets. Also, he said, banking giant Citicorp in New York already operates here through Citicorp Savings, an Oakland-based thrift.

“I believe 1991 will be greeted not with a bang, not even with a whimper, but with a yawn,” Reichardt said.

Banks in Western states are allowed to operate in California if they allow California banks to operate there. State laws will expand interstate banking nationwide in 1991, allowing all out-of-state banks into the lucrative California market. However, under new federal legislation, an out-of-state bank could buy a troubled thrift in California, further eroding interstate barriers.

Reichardt said that although major New York money center banks--Chemical Bank, Chase Manhattan and Manufacturers Hanover--have California “beachheads,” they are unlikely to be major players in the state.

He said he believes that those banks will find it hard to justify buying substantial bank operations in California, in part because they are under pressure to conserve capital after recently setting aside large amounts of money as reserves for bad foreign loans.

Separately, Reichardt said Wells Fargo--which this year has been buying small- and medium-sized banks in California--is interested in expanding as well in Arizona, despite the current severe real estate recession there. He said those problems are creating opportunities for buyers and that the state is continuing to grow, albeit at a slower pace than in the past.