Wells Fargo & Co. on Monday said it agreed to hire 25 investment bankers from Chicago hedge fund Citadel LLC.
Wells Fargo is also acquiring all the deals Citadel Securities, the hedge fund's advisory and market-making arm, is currently working on, including its role as one of many underwriters on the Groupon Inc. initial public offering, a person familiar with the situation said. Terms of the deal weren't disclosed.
Citadel, the trading company founded by Kenneth Griffin, has tried in fits and starts to build an investment bank for three years in an effort marred by high staff turnover. Last week it began cutting research staff as it considered a sale of its investment-banking business.
The move comes as San Francisco-based Wells Fargo is trying to make a bigger name for itself in investment banking. Wells Fargo, though one of the biggest U.S. lenders with $1.3 trillion of assets, doesn't factor among the top-ranked banks in the lucrative merger-advisory business. For much of its over 150-year history, Wells Fargo didn't have a sizeable securities division. It inherited one in its 2008 acquisition of Wachovia Corp.
Since then Wells Fargo has tried to use its balance sheet and corporate relationships to land securities assignments. Earlier this year, Wells Fargo snagged Warren Buffett's Berkshire Hathaway Inc., the bank's biggest shareholder and a Wells Fargo stockholder for more than 20 years, as a client on a $1.5 billion bond offering.
Robert Engel, Wells Fargo's co-head of investment banking, told Dow Jones Newswires in an interview earlier this year, "Our biggest challenge is to continue to deepen the relationships Wells already has so that more CEOs and boards view Wells Fargo as the trusted advisor for all their strategic banking needs, including accessing the capital markets and M&A."
Macquarie Capital analyst Thomas Alonso wrote in a research note the "acquisition adds bulk to [Wells Fargo's] investment-banking franchise, while helping to build out ... financial technologies and gaming and leisure."
"Wells Fargo's disciplined approach to building out its investment bank both organically and through strategic hires limits risk associated with large-scale build-outs," he said.
Citadel's Brian Maier will join Wells as a vice chairman in client coverage. His career also includes stints at Merrill Lynch and Goldman Sachs Group Inc. He will be based in New York and report to Engel and Jonathan Weiss, the other co-head of investment banking at Wells Fargo Securities.
Other senior bankers joining Wells include Stephen Gerson, Aviv Laurence, Paul Pepe, and Stavros Tsibiridis.
Citadel's research and deal-advisory units are part of Citadel Securities, which also includes electronic trading and options market-making. In contrast to investment banking, the trading businesses are closely connected to Citadel's longtime strengths, including its high-frequency-trading operations and asset-management unit, where outside clients have money invested in hedge funds.
Liz Moyer and Matthias Rieker are reporters for Dow Jones Newswires, where this story originally appeared. Write to Liz and Matthias.