Wells Unlikely to Pursue a Big Merger, CEO Says

Wells Fargo & Co.’s chief executive said Tuesday that it was “very unlikely” that the No. 5 U.S. bank would soon undertake a major merger, but that prices on some smaller potential acquisition targets had come down.

Dick Kovacevich, whose Norwest bank merged with Wells Fargo in 1998 and took the latter’s name, said big mergers make it difficult to expand existing businesses because management spends too much time integrating the merged companies.

Kovacevich said he was focusing on selling more products to Wells Fargo’s existing customers.

“When you do a big deal, you need to put in the opportunity cost of not growing a mammoth organization, $435 billion, organically,” Kovacevich said, referring to Wells Fargo’s total assets. “That is why it’s very unlikely that Wells Fargo will consider a mega-deal.”

Kovacevich was speaking at a Bank of America investment conference in San Francisco, where Wells Fargo is based.

He made his comments three months after Wachovia Corp. CEO Ken Thompson said his bank would consider a big merger if it made sense for shareholders.

But after this heightened speculation about a Wachovia-Wells Fargo pairing, Thompson backtracked in July, saying he would discuss mergers less often. Charlotte, N.C.-based Wachovia has little geographic overlap with Wells Fargo.

Wells Fargo shares fell 37 cents to $59.23.