“Wells Fargo & Co., the lender that’s expanding its securities unit to challenge Wall Street competitors, is broadening U.K. commercial property lending as European banks are forced to retreat.
“Coming in now, when there is scarcity of capital, we can start to bank U.K. companies and have a very good chance of developing a long-term relationship,” Chip Fedalen, head of institutional and metro-markets at the bank’s commercial real- estate division, said in a telephone interview. “We want to be there forever.”
Wells Fargo Chief Executive Officer John Stumpf is looking beyond the U.S. after becoming the nation’s leading home-lender, biggest commercial-property servicer and owner of the largest retail-branch network. The bank is searching forrevenue to extend three years of record profits amid weak loan demand and shrinking lending margins, and has purchased debt portfolios from European lenders exiting U.S. markets.
The San Francisco-based bank plans to increase its U.K. business as the amount of real-estate debt maturing in the country this year exceeds available funding by $25 billion, real-estate broker DTZ said in a November report. That funding gap is widening profit margins, attracting debt funds, insurers and other U.S. banks, including Bank of America Corp., who can charge borrowers higher interest rates. It may also help revive the region’s commercial mortgage-backed securities market that’s been largely frozen since 2008.
