Introducing 'Behind the Money': Can Wells Fargo make it in investment banking?

Ethan Wu (0:00)

Hey, listeners, Unhedged is on a break today, but we wanted to introduce you to another FT podcast, Behind the Money.

SPEAKER_2 (0:08)

Every week on the show, the host, Michaela Tindera, takes you inside one of the biggest stories in finance and business with help from FT reporters from around the world. The episode you're about to hear is all about the US-based bank, Wells Fargo.

Ethan Wu (0:22)

Wells Fargo built a reputation as a Main Street lender, and now it's pursuing something that many other Main Street banks have tried and failed to do. That is, successfully push into investment banking. Can Wells Fargo pull it off? Michaela has more.

Michaela Tindera (0:43)

Over the past couple of months, one of the biggest questions in media deal making has been, who's going to buy Warner Brothers Discovery?

SPEAKER_4 (0:51)

Today, Netflix announcing a blockbuster agreement to buy Warner Brothers for sale.

Charlie Scharf (0:56)

Not so fast, Netflix.

SPEAKER_4 (0:57)

Paramount launching a hostile takeover bid for Warner Brothers.

Michaela Tindera (1:00)

There's been so much going on, it's enough to make your head spin.

SPEAKER_6 (1:04)

Netflix has revised its offer that Flix and WBD hope that the amended plan will help fend off Paramount's hostile takeover bid for all of Warner Brothers.

Joshua Franklin (1:12)

You have three of the biggest names in Hollywood, in Netflix, Paramount, Warner Brothers' discovery, and it's really going to be a deal that's going to settle what the entertainment industry looks like.

Michaela Tindera (1:24)

Whichever way the dust settles, it'll be monumental for Hollywood. But this process also represents a key moment in one pocket of Wall Street that you might have missed in all the back and forth.

Akila Quinio (1:36)

So late last year, it came out that the US bank Wells Fargo had agreed to pay half of a $59 billion bridge loan to Netflix to help them buy Warner Brothers.

Michaela Tindera (1:46)

That is nearly $30 billion of loans.

Akila Quinio (1:49)

The bank claims it's the largest financing of its kind ever, and it really signals a significant shift in Wells Fargo's overall ambitions.

Michaela Tindera (1:57)

That's because Wells Fargo has been working on a Hollywood makeover of its own sort. It has a new appetite for mega deals, and that's a big break from its reputation as an all-American consumer bank.

Akila Quinio (2:10)

Wells Fargo is known in the US for its retail franchise primarily. It's one of the oldest Jewish banks, and it for a long time kind of predated itself in being a Main Street, not Wall Street lender. But now that's changing, and it wants to push further into investment banking and go head to head with its Wall Street rivals.

Joshua Franklin (2:28)

But many banks have tried and failed to do this. Even the CEO of Wells Fargo himself has talked about the graveyard full of investment banking hopefuls on Wall Street. You think of the likes of Credit Suisse, Deutsche Bank, RBS. They will try to go up against the likes of Goldman and JP Morgan. And what banks often find is it's a very different business. So there are cautionary tales. And if this goes south for Wells, it could end up being an expensive mistake.

Michaela Tindera (2:59)

I'm Michaela Cindera from the Financial Times. Today on Behind the Money, Wells Fargo has a new plan to push into investment banking. But can they surpass or even compete with their Wall Street rivals?

I'm here with the FT's US banking correspondent, Akila Quinio, and US banking editor, Josh Franklin. Josh, Akila, welcome to the show.

Joshua Franklin (3:40)

Thanks very much.

Akila Quinio (3:41)

Thanks for having me.

Michaela Tindera (3:42)

So we're talking about Wells Fargo today, as we've established. Now, I have to say, this bank is old by American standards. It was founded over 170 years ago. And you know, back in the day, it really pushed out this image of being pretty folksy, their ads leaned quite heavily on symbols of the Old West.

SPEAKER_9 (4:13)

Over the years, more people have trusted more things they really value to Wells Fargo than to anyone else.

Michaela Tindera (4:19)

So could you tell me just briefly about Wells Fargo's history and its brand? You know, what is it known for?

Akila Quinio (4:26)

So Wells Fargo, unlike some of its Wall Street rivals, was founded in the west coast of the US and San Francisco, and it became known for financing the gold rush, you know, 173 years ago was when it was created. And since then, it's been known as a very American retail bank. So you know, serving everyday people on Main Street.