As part of its efforts to broaden its reach in international business, Wells Fargo & Co. (WFC) has expanded its wholesale banking activities throughout Canada. The company has opened new branches and will now offer expanded lending, treasury management, foreign exchange as well as trade services to its customers.
This expansion in business activities in Canada follows the receipt of regulatory nod in late September that allowed the company to operate as a Scheduled III bank and offer commercial and corporate banking capabilities. Earlier, the company had select businesses in the country including Business Direct, First Union Rail, Capital Finance and Equipment Finance.
Under the new license, Wells Fargo is scheduled to commence operations of Commercial Banking, Global Banking, Commercial Real Estate and the Energy group business first. Further, with the building of its capacities in Canada, Wells Fargo contemplates inculcating select pre-existing business activities into the new branch.
With its head office in Toronto and the new branch offices spanning Vancouver, Calgary and Montreal, the Wells Fargo team comprises 75 members. In addition to benefitting the local Canadian companies, this enhanced scale of Wells Fargo would support the company’s present U.S. customers with subsidiaries in Canada as well as Canadian companies with business in the U.S.
Following a solid trend in earnings over the past several quarters, Wells Fargo, which was mainly concentrated in conducting business locally earlier, is now making strategic efforts to increase its international presence.
In addition to extending its business in Canada, in the recent past, Wells Fargo has capitalized on the deleveraging activities of the European companies. Since 2011, the company has completed a number of transactions, which include both loan portfolio purchases as well as business unit acquisitions.
While it still lags the vast international presence of its peers such as that of Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM), we believe this strategic business expansion would help augment Wells Fargo’s top line and add to its profitability.
Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering its fundamentals, we also have a long-term Neutral recommendation on the stock.