Buffett boosts Berkshire's Wells Fargo stake to 10%

[NEW YORK] Warren Buffett's Berkshire Hathaway Inc on Monday said it has increased its ownership stake in Wells Fargo & Co to 10 per cent, a level that could mean increased federal scrutiny over the investment.

Berkshire owns 506.3 million shares of Wells Fargo, worth about US$24.7 billion, mainly through subsidiaries, according to filings with the US Securities and Exchange Commission.

The ownership stake has risen from 6.5 per cent at the end of 2009 and 9.8 per cent as of Dec 31, according to Buffett.

Berkshire has paid close to US$13 billion for its Wells Fargo shares, based on Mr Buffett's shareholder letters and the bank's recent stock price.

Wells Fargo is based in San Francisco, and is the third-largest US bank by assets. A spokesman did not immediately respond to a request for comment.

The Federal Reserve exerts special oversight when investors take large stakes in banks.

In a September 2008 policy statement, the Fed said it often lets investors take double-digit bank stakes not designed to exert a "controlling influence," but would review any resulting business relationships "case-by-case." The US Treasury Department, meanwhile, has said it will not deem a 10 per cent stake to result in "control" of a bank if the investor agrees in writing to limits on its involvement.

In one of Monday's filings, Mr Buffett certified that Berkshire's Wells Fargo shares "were not acquired and are not held" with the intent of changing how the bank operates.

Speaking on CNBC television on Feb 29, Mr Buffett called Wells Fargo "a terrific operation" and said Chief Executive John Stumpf has done a "fabulous job." Berkshire also owned a 15.6 per cent stake in American Express Co as of Dec 31. It operates close to 90 businesses including the Geico insurer, the BNSF railroad, various utilities and Dairy Queen ice cream.

Wells Fargo shares closed down 20 cents at US$48.70 in Monday trading on the New York Stock Exchange.

REUTERS