Warren Buffett’s Berkshire Hathaway Inc. applied to the Federal Reserve for approval to expand its stake in Wells Fargo & Co. after reaching the 10 percent threshold that requires regulatory review.
“Berkshire is seeking permission to retain its current ownership position in Wells Fargo and to acquire additional shares of common stock of Wells Fargo for investment purposes,” Buffett’s Omaha, Nebraska-based company said in an application to the Fed. ” Berkshire does not have any specific transaction or dollar value in mind with respect to any such potential purchases.”
U.S. regulations have long limited ties between non-financial companies and banks. Investors typically have to tell the Fed and the public before acquiring 10 percent ownership in a bank, though that notice can be delayed if the threshold is reached because of share repurchases.
Berkshire said in the application that it hasn’t bought shares in Wells Fargo since Oct. 21. Buffett’s company learned that it crossed the limit in March, when the bank updated its share count to reflect buybacks. Berkshire told the U.S. Securities and Exchange Commission that month that the stake had reached 10 percent.
Buffett’s company has no plans to merge Wells Fargo with another firm or to make any significant changes to its strategy or corporate structure, according to the application, which is dated June 14. Nor is Berkshire contemplating any changes to the San Francisco-based bank’s board, the company said.
Voting Rights
Buffett seldom interferes with management and has accepted limits in the past to provide assurances that he doesn’t plan to exert excessive influence on companies where he is a major shareholder. In 1977, he agreed to cede voting rights on his holding of Washington Post Co. to the family that controlled the company.
The billionaire committed in the 1990s to be a passive shareholder at American Express Co. after Berkshire’s stake climbed to more than 10 percent. The holding has since reached about 16 percent.
Buffett has long been a fan of Wells Fargo and invested in the bank in 1989. Most of his stake is held through Berkshire insurance subsidiaries, though he also owns some shares of Wells Fargo personally.
The entire investment is worth more than $23 billion based on Friday’s closing share price of $47.03. Almost all the shares were accumulated at an average price of $25.46, according to Berkshire’s annual report.
Wells Fargo’s View
None of the other top four lenders in the nation can claim a single investor with a holding the size of Buffett’s Wells Fargo stake. The bank is the third-largest U.S. lender by assets.
“We are aware of Berkshire’s most recent filing,” Mark Folk, a spokesman for Wells Fargo, wrote in an e-mail. “We value Berkshire Hathaway as a long-term shareholder and customer, and we appreciate the confidence that Berkshire’s executive team has shown in Wells Fargo.”
A spokesman for the Fed in San Francisco didn’t immediately respond to a request for comment on the regulator’s review process. Buffett didn’t immediately respond to a request for comment left with an assistant.
The application also includes some material submitted confidentially, including biographical and financial reports from Buffett and Berkshire Vice Chairman Charles Munger along with fingerprint cards for the executives, according to a cover letter.