SAN FRANCISCO -- Wells Fargo Bank, known for its cost-cutting zeal, said Wednesday it would dispose of its four international offices immediately and focus on domestic operations.
Wells Fargo said it has signed agreements to sell its Singapore and Seoul, South Korea, offices to the Bank of Hawaii and turn over its Hong Kong office to the Hongkong and Shanghai Banking Corp. of Hong Kong, parent of Hongkong Bank.
Terms of the deals were not disclosed.
The fate of Wells Fargo's Tokyo branch is uncertain. Hongkong Bank will either fold it into its own four Japanese branches or help sell it, a Wells Fargo spokeswoman said.
'We want to continue to stick to the business we do best,' said spokeswoman Betty Lattie. 'We want to service the California-based customer, the California-based business.'
Wells Fargo Bank, the third largest in California, is known for its tight regional focus. Unlike larger national banks, the company has completely sold off its portfolio of Third World debt and severely cut its foreign loans.
Its overseas offices primarily served domestic commercial customers, such as importers and exporters, doing business abroad.
Under an agreement with Hongkong Bank, services such as trade financing and document handling will be available to Wells Fargo customers through Hongkong Bank's worldwide network of more than 1,300 offices in 50 countries.
Hongkong and Shanghai Banking Corp. is one of the 30 largest banking groups in the world, with assets of $113 billion. It is one of the dominant banks of the Pacific Rim, analysts said.
Wells Fargo Chairman Carl Reichardt said the agreement with Hongkong-Shanghai is 'the first of its kind for a major U.S. bank and a forerunner of how global banking will be done in the 1990s.'
Hongkong Bank will take over the Hong Kong branch and retain most of its 19 employees, Lattie said. Hongkong Bank will refer retail customers at its San Francisco and Los Angeles branches to Wells Fargo.
In the future, the two banks will explore ways to let Wells Fargo customers electrnoically initiate letters of credit abroad and take advantage of international cash management services.
Analysts praised the move, noting that Wells Fargo customers will continue to be served overseas, without Wells Fargo having to foot the bill for expensive overseas offices. Although the overseas branches were probably profitable, they did not make enough money to please cost-concious Wells Fargo, analysts said.
'I think what this represents is an example of the dedication of Wells Fargo management to maximizing profits,' said Thomas Brown, an analyst with Smith Barney, Harris Upham & Co. in New York. 'This is a result of Wells Fargo's focus, and that has been the key reason they have been as profitable as they have.'
Wells Fargo & Co., the 11th largest banking company in the country, reported first-quarter net income Tuesday of $141.5 million, or $2.56 a share, up 18 percent from a year earlier.
President Paul Hazen said at the company's annual meeting Tuesday that 'a comprehensive review of its international offices' indicated the bank would 'have to approach the business differently than in the past.'
The company said it would sell its small Singapore office and Seoul, South Korea, branch to the Bank of Hawaii. Bank of Hawaii officials said the South Korea branch had adsets of $40 million and liabilities of $35 million.