If Wells Fargo & Co. decides to move into the two towers that are slated to rise next to the planned Vikings stadium, the offices would be the latest shining example of an ambitious bank’s good times.
The move would also illustrate something more mundane: the bank’s ongoing effort to squeeze more efficiency out of its operations.
Executives at the San Francisco-based bank, regarded as one of the healthiest in the country, have been vocal about cutting expenses, recently citing “hundreds of projects” underway to shave costs.
Reducing the cost of office space is a big part of that, and the bank has been looking to consolidate some of its widely dispersed workforce in the Twin Cities to make more efficient use of space.
Wells Fargo said Tuesday it hasn’t committed to becoming the all-important corporate anchor for the $400 million development that Ryan Cos. envisions for five blocks near the stadium. “We’re working on it,” spokeswoman Peggy Gunn said.
But Gunn said that if the bank moves forward with the project it could involve moving workers from any of the bank’s more than 16 locations around the Twin Cities. The Ryan Cos. plan includes two 20-story office towers and nearly 1.2 million square feet of office space.
Joe Morford, an analyst at RBC Capital Markets in San Francisco, said the bank’s potential Minneapolis consolidation is “very consistent with how they’ve been managing the business over the last couple of years.”
“I think in this challenging revenue environment, with this sluggish economy and low interest rates, banks are having to focus more and more on managing their expenses,” Morford said.
Altogether, Wells Fargo has trimmed the real estate it occupies by about 18 million square feet in the last four years, shrinking the total to about 98 million square feet, Wells Fargo CEO John Stumpf told analysts in the bank’s first quarter earnings call. “Yet we have more people, more customers, more products, more services,” Stumpf said. “And I think that’s the magic here.”
Wells employs about 20,000 people in Minnesota. Its main base is in the 56-story Wells Fargo Center in downtown Minneapolis, but the lender has operations in at least 16 spots around the metro area, not including bank branches.
Locations include a large call center in Shoreview, where about 1,000 people work; a post-closing imaging center in Eagan; and the Wells Fargo Home Mortgage unit on the old Honeywell campus in south Minneapolis. The bank invested $175 million in the mortgage campus, where more than 4,000 people work.
Most recently Wells Fargo has been consolidating employees at the Metropoint complex in St. Louis Park.
In downtown Minneapolis alone it occupies 2 million square feet of office space. That includes the Wells Fargo Center and several other locations scattered downtown.
The bank leases about 500,000 square feet in the nearby Baker Center, about 520,000 in the Northstar Center and 28,000 in the Fifth Street Towers, where 100 employees work in foreign trading and credit card services.
In the IDS Center, Wells Fargo Advisors occupies 17,000 square feet and the bank also has a lease in the building for about 28,000 square feet that is sitting vacant.
Gunn emphasized Tuesday that if the bank signs on to the Ryan project, the new offices will not be a Wells Fargo Home Mortgage campus like the one in south Minneapolis.
The project won’t be built for three years, she said, and the bank will evaluate its needs at that time. “It’s just really too early to know what our staffing needs will be,” Gunn said.
The bank has mined a rich vein of gold in mortgages, despite its hand in the housing collapse and foreclosure crisis. But with the interest-rate driven boom in mortgage refinancing cooling, it has been shifting energy to home purchase loans.
Mortgages aren’t the bank’s only ambition. Wells Fargo shifted gears after swallowing Wachovia Corp. in 2008, widening its strategy beyond its traditional consumer banking base and venturing deeper into investment banking.
About 30 percent of Wells’ fee income in the first quarter came from trust and investment income, an area that has generated more fee income for the bank that any other category, including mortgage banking, in recent quarters.
Wells Fargo is also expanding the securities business. The bank has about 20,700 employees now in the Charlotte, N.C., area and recently opened a large securities trading floor in the Duke Energy Center in downtown Charlotte devoted to bonds and other fixed income instruments.