Who are Wells Fargo’s Main Competitors?

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The main competitors of Wells Fargo & Company are three of the other “big four” major U.S. banks: JPMorgan Chase, Citigroup and Bank of America. These four banks together hold approximately 40% to 45% of all U.S. bank deposits and serve the majority of personal and commercial accounts in the United States.

In terms of total assets as of December 2018, JPMorgan Chase is the largest, followed by Bank of America, Wells Fargo and Citigroup. Each of the big four banks has trillions in assets.

This short article will outline some of the key facts about Wells Fargo and its main competitors in the U.S.

Wells Fargo: An Overview

Wells Fargo, headquartered in San Francisco, was founded in 1852 by Henry Wells and William G. Fargo. It holds the distinction of operating under the very first national bank charter granted in the U.S.

It is currently the country’s third largest bank by market capitalization, which was $224.3 billion as of Feb. 8, 2019. In 2018, Wells Fargo was recognized as the world’s third most valuable bank brand name (behind ICBC and China Construction Bank) in a Brand Finance study of more than 500 banks.

Wells Fargo offers a wide range of banking and financial services through more than 50 business lines and operates in more than 35 countries worldwide. As of their Q4 2018 earnings, its return-on-assets, or ROA, ratio is 1.18%, and its return-on-equity, or ROE, ratio is 10.22%. Wells Fargo has a price-to-book, or P/B, value of 1.26 as of Feb. 8, 2019.

Wells Fargo suffered several crises after being slapped with fines following a series of violations. In 2018, the bank agreed to pay $1 billion in fines for charging mortgage and loan customers extra fees. It also paid $185 million in penalties after acknowledging that it opened 3.5 million unauthorized bank accounts and credit cards going back to 2016 The bank also agreed to issue affected customers with refunds.

The bank has more than 5,700 branches in the United States as of 2019 — the largest amount in the country. But in January 2018, it announced it would close as many as 800 by 2020 in order to cut down on costs.

JPMorgan Chase

Although it dates back to the original bank formed by J.P. Morgan, JPMorgan Chase & Company was created as it exists now through the 2000 merger of JP Morgan Bank and Chase Manhattan Bank to become the fourth largest bank worldwide. JPMorgan Chase has engaged in a number of mergers and acquisitions, including Bank One, the Bank of Chicago and Bear Stearns.

The firm is the largest bank in the United States with a market cap of $337.1 billion as of Feb. 8, 2019, and $2.53 trillion in assets.

Headquartered in New York, the bank operates across the entire spectrum of banking and financial services in more than 100 countries through four divisions. They include Asset Management, Corporate and Investment Banking, Consumer and Community Banking, and Commercial Banking.

As of the company’s Q1 2018 earnings, JPMorgan’s ROE ratio is 11.95%. It has a P/B ratio of 1.44.

Bank of America

Bank of America Corporation, headquartered in Charlotte, North Carolina, is the second largest bank in the United States by market capitalization, which is $277.6 billion as of February 2019. It is also the second largest with $2.28 trillion in assets as of December 2018.

It achieved its current size through a series of mergers and acquisitions, including NationsBank and Fleet Boston Financial. Bank of America’s 2008 acquisition of Merrill Lynch transformed it into one of the largest investment banking operations worldwide and boosted it to being one of the largest wealth management companies in the world.

Bank of America has a vast retail banking presence with retail operations in all 50 states, serving more than 50 million consumer and business accounts. Bank of America’s TTM ROA ratio is 1.21% as of Dec. 31, 2018. Its ROE is 10.07%. It has a low P/B ratio of 1.13.

Citigroup

Like its fellow big four banks, Citigroup is a multinational banking and financial services company. Headquartered in New York, the bank was formed through one of the largest mergers in history, that of Citicorp bank and the financial services firm, Travelers Group. The bank falls in fourth place, behind Wells Fargo, with a market cap is $151.4 billion as of Feb. 8, 2018, and $1.84 trillion in assets as of December 2018.

Prior to the 2008 financial crisis, Citigroup was ranked as the largest company and the largest bank worldwide, but the company suffered massive losses during the financial crisis, dropping all the way down to last place among the big four.

Citigroup’s TTM ROA is 0.95%, and its ROE ratio is 8.55%. Citigroup has a P/B ratio of 0.83.

Source: Investopedia

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