Richard Kovacevich: Half Of Banking's New Odd CoupleAndrew Osterland
Richard Kovacevich has long disdained banking's merger mania. As recently as May 29, the Norwest CEO insisted he was in no hurry to participate in it. "Bigger doesn't make you better," he said.
Times change--and quickly. On June 8, Kovacevich and Wells Fargo CEO Paul Hazen announced a $34 billion merger to create a bank with assets of $178 billion. "I'm not against bigness, as long as it's consistent with your strategy," says Kovacevich.
That's where Wall Street is confused. He has long emphasized service-oriented community banking. Wells, by contrast, is the technobank, intent on maximizing efficiency by minimizing customer contact. "They couldn't be more different in ...philosophy," says Moshe Orenbuch of Sanford C. Bernstein. Investors worried about the clash of cultures sent Norwest's stock down 7% on news of the deal.
Kovacevich says the differences will make the combination a natural. "We have the best community bank model. They have the best alternative distribution model. Together we're a powerhouse." Well, they're certainly bigger.
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