America's No. 1 financial conglomerate

Chapter 372 Large Loans

Once formal negotiations began, Wells Fargo demonstrated its sincerity.

Richard's first words were full of goodwill, setting the tone for the loan negotiations and indicating that Wells Fargo highly respected Ernst, a major client.

"Mr. Garfield, regarding your personal credit limit, we held a board meeting before coming to New York and increased your personal credit limit to $6 million, which is the maximum we can offer."

Richard confidently stated, "This credit limit is unique among all Wells Fargo's clients, and I doubt any other major Wall Street bank would offer you this limit."

"Thank you." Ernst expressed his gratitude. "Although this is our first meeting, I think we should already be friends. Please call me Ernst."

Wells Fargo has indeed gone to great lengths to retain him as a major client.

As far as Ernst knew, the maximum credit limit for personal loans at major Wall Street banks was generally $300 million, and only a handful of banks in the world could afford that limit.

Any amount exceeding the $300 million limit requires special board approval, and such cases are extremely rare, barely exceeding a handful.

Anyway, he knew one person with a credit line exceeding $300 million, and that was Warren Buffett, the stock market guru, who had a personal credit line of $500 million with Citibank.

Even Bill Gates, the world's richest man, doesn't have that kind of limit.

"Regarding the interest rate," Richard flipped through the documents in front of him and pushed them towards Ernst, "the five-year loan rate is 4.25%. We're practically offering it at cost."

Logically speaking, a 4.25% interest rate is indeed tempting for any customer, especially since the federal funds rate is currently only 3.25%.

With a rate of 3.5%, and deposit rates at major banks around 3%, Wells Fargo has squeezed its profits to the extreme.

But Ernst frowned after looking at the interest rate figures. He shook his head and said in an undeniable tone, "This interest rate is too high. It must be lowered by another fifty basis points."

"What?" Richard suspected there was something wrong with his ears. He instinctively rubbed his ears, as if to check if earwax was blocking his hearing.

Not only him, but several senior executives from the Wells Fargo team sat up straight instantly, their eyes filled with a look of utter disbelief. Even Jane Fraser couldn't help but widen her eyes, clearly shocked by Ernst's words.

They're not even satisfied with a 4.25% interest rate, considering that the normal lending rates across the US are now above 5.5%, ranging from 5.5% to 6.25%.

"Ernst, I don't understand." Richard's smile faded, and his tone became serious. "This 4.25% interest rate was decided by our board of directors after a long meeting. The interest rate we offered is already the lowest we can offer. I believe you won't find any dollar loan with a lower interest rate anywhere in the world."

In order to secure this large order from Ernst, Wells Fargo urgently convened a meeting of its senior members and, after several discussions, finally settled on such a low interest rate.

The purpose is self-evident: to stabilize the relationship with Ernst, a major client.

Unexpectedly, the part that was thought to be the least controversial actually caused dissatisfaction from the other party.

If Wells Fargo were to lower the interest rate by another 50 basis points, as the other party suggested, to a base rate of 3.75%, the bank would have almost no profit left from the intermediary fees, which is unacceptable to them.

We can't work hard all day only to end up losing money when we do the math.

While it's unlikely to result in a loss, not making a profit is still a loss.

Ernst, however, remained calm. He picked up his coffee and took a sip. "Of course I know the sincerity of the wealthy nation. Otherwise, I wouldn't have chosen you as my first negotiating partner. I can't just ignore my friends and go after strangers, can I?"

Ernst affirmed Wells Fargo's stance, but also implied that Wells Fargo was not his only option.

No one present doubted that if he sent out a message saying he wanted a loan, bank managers from all over the world would line up from Queens to Manhattan.

"But don't forget, this time I'm not borrowing $6 million, I'm borrowing $26 billion. With such a large amount, I don't think it's a problem to lower the interest rate by another 50 basis points."

Richard was about to retort when Ernst raised his hand to stop him, silencing him before he could speak. "I know that Wells Fargo merged with Norwich Bank at the beginning of the year, and I also know that Wells Fargo is currently negotiating the final merger details with Northwest Bank."

"This is a mega-merger deal worth over $350 billion. Once the merger is complete, Wells Fargo will be able to directly cover its East Coast operations and become a national bank."

These words made Richard's expression change. Although the merger of Wells Fargo and Northwest Bank was public knowledge, the power struggle among the management was an internal secret.

He hadn't expected Ernst to know that the two sides had reached the final stage of negotiations and that the merger could basically be declared a success.

For a moment he thought of Jamal Murray beside him, but he quickly dismissed the idea that it was Jamal Murray who had leaked the information, because he had no involvement in these matters.

Ernst looked at his expression, a faint smile playing on his lips, and said in a whisper, "Of course, the company's interests are important, but sometimes, personal gains and losses also need to be considered."

"Impressive." Jamal, who hadn't said a word, couldn't help but give Ernst a thumbs up in his mind.

If the roles were reversed, Jamal would feel like he had already signed the contract, since the interest rate was so low that he didn't think there could be an even lower rate.

But Ernst found the opening and tore through Richard's psychological defenses in one fell swoop.

The merger of Wells Fargo and Northwest Bank is undoubtedly the most important event for Wells Fargo at this stage.

This is a matter of strategic importance; everyone knows it, and no one can stop it.

However, this may not be a good thing for the top management and core departments of wealthy countries.

Northwest Bank is not much smaller than Wells Fargo. If the two merge, there will be competition for management positions, and internal factions will become more prominent. It's uncertain who will ultimately win the CEO position.

If Richard wants to remain CEO of New Rich Country, he must produce sufficient results.

As for the low interest rate, Ernst had already thought of a reason for him to explain it to the board of directors after agreeing to it.

First it acquired Norwich Bank, and now it's merging with Northwest Bank.

While the scale of assets has indeed grown, the hidden risks have also increased, namely the increase in bad debts.

A billionaire like Ernst is absolutely the bank's favorite customer, bar none.

He has high-quality assets as collateral, so the risk exists only in theory. He can be said to have a guaranteed income regardless of circumstances.

The interest rate is lower, but the loan amount is too large.

Jamal can now imagine the inner struggle Richard must have been going through; on one hand, he definitely wanted to secure the order.

On the other hand, he certainly wants to try again, as a higher interest rate would solidify his position in a wealthy country.