Business Notes Banking

Founded soon after the Gold Rush of 1849, Wells Fargo is California's oldest bank. Last week the San Francisco company, which still uses its familiar stagecoach symbol, scooped up some glittering gold dust when it agreed to pay Britain's Midland Bank $1.08 billion for Crocker National, another San Francisco bank. If the deal goes through, the combination of Wells Fargo (1985 assets: $29.4 billion) and Crocker will be the largest banking merger in U.S. history. The agreement ended six months of secret negotiations between Wells Fargo and Midland executives. No one at Crocker had known that a deal was in the works.

Midland bought controlling interest in Crocker in 1981. Shortly thereafter, Crocker began losing money because of shaky loans, but Midland reorganized the California bank and helped it earn a profit of $38 million in 1985. Midland was willing to sell Crocker because better profit opportunities are becoming available in Britain as the government of Prime Minister Margaret Thatcher deregulates the country's financial markets. For that reason, Midland decided that it made more sense to deploy its resources at home rather than continue a long-distance relationship with Crocker.