TEXT-Fitch says Wells Fargo rtgs unaffected by purchase

Tue May 1, 2012 2:45pm EDT

May 1 - The ratings for Wells Fargo & Company (WFC) are not impacted by the acquisition of prime broker services provider Merlin Securities (Merlin), according to Fitch Ratings. Merlin offers prime brokerage services to more than 500 clients, largely hedge funds. The deal is expected to close in 3Q12, and provides an entry into prime brokerage for WFC. Currently, Fitch does not view prime brokerage as a key growth objective for WFC. Despite being a profitable business, Fitch does not see prime brokerage becoming a considerable part of WFC's revenue mix. WFC is adding prime brokerage services under an open architecture framework to its suite of customer offerings. While WFC may use Merlin as a platform for further expansion, the transaction is still viewed as relatively small in nature. WFC has historically concentrated on traditional commercial banking, which is a key credit strength for the bank. With its 2008 purchase of Wachovia, WFC transformed itself into a dominant, national banking company, and as a result of the acquisition, inherited Wachovia's trading and advisory businesses. These businesses were not a key focus of WFC's business model prior to the acquisition, but may be growing in importance as WFC seeks to provide its customers with a broader suite of products.