With the aim of expanding its international banking, Wells Fargo & Company (WFC) announced its intention of acquiring all the US-based operating assets of Foreign Currency Exchange Corporation (FCE), a wholly owned subsidiary of the Bank of Ireland Group.

Though the deal is expected to be completed in summer, the financial terms were not disclosed.

Orlando, Florida-based FCE is a wholesale foreign currency conversion provider. At present, the firm provides currency conversion to about 140 of the top 200 banks in the U.S. as ranked by number of branches. FCE enables banks to offer foreign currency exchange services to their clients under each bank’s name.

The acquisition will help WFC to offer currency exchange solutions to customers under its own brand. FCE will be incorporated into the International Group of WFC, which will enable banks to provide correspondent bank customers access to a range of other products and services.

WFC’s Global Financial Institutions group provides correspondent banking services to over 1900 U.S. banks. At current level, more than 50% of FCE customers are WFC clients, who are expected to help in the transition process. Majority of the total 65 FCE employees will be offered to join WFC.

Specifically, WFC International Group serves small businesses, corporations, financial institutions, multilateral organizations and individuals with a wide range of international solutions from more than 30 global locations, including branches in Hong Kong, London, Seoul, Shanghai, Singapore, Taipei, Tokyo and the Cayman Islands.

We believe that with its diverse geographic and business mix, WFC is well positioned compared to its peers. The Wachovia acquisition and the demise of some of the smaller players facilitated the company to garner a larger share in the mortgage markets.  Further, the recent acquisition will strengthen WFC’s international operations. Yet, the recent financial regulations are anticipated to negatively impact the company’s top- and bottom-line results. Besides, costs associated with loan resolutions and loss mitigations are also expected to remain elevated in the near term.

WFC currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Moreover, considering the fundamentals, we maintain our long-term “Neutral” recommendation on the stock. WFC’s closest competitor – JPMorgan Chase & Co. (JPM) also retains a Zacks #3 Rank (a short-term ‘Hold’ rating).

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