When cutting costs is not enough
First Union: getting the blues up north
Investors and analysts love the new Wells Fargo that has resulted from Norwest's takeover. Its CEO, former Norwest chief executive Dick Kovasevich, had previously eschewed any large deals, preferring to snap up small banks as the opportunity arose. "His style is to be conservative with his numbers, and aggressive on his selling," says Sally Pope Davis, bank analyst with Goldman Sachs. It's an approach that made him a nonentity in the consolidation market in the mid-1990s.
He is now reaping his reward. In 1997 CSFB bank analysts, led by Mike Mayo, managed to see Kovasevich face to face. It was a half-hour journey from Manhattan to the airport, and it stuck in their minds. The ride was in a yellow cab, wrote Mike Mayo and Brad Ball in a report earlier this year, not a limo, and the airport was La Guardia, "not Teeterboro with its private jets. We asked whether Norwest would pay a hefty premium for another bank, since several competitors at the time had done so. The answer was no, given Kovasevich's belief that some of the mergers from 1996-97 would not achieve their benefits, so giving him a second look."