How can banks survive? Featured

7:00pm EDT December 26, 2008

The economic climate that financial institutions find themselves in is challenging, to say the least.

So how do banks manage to survive these uncertain economic times? And what of the bankers whose livelihood depends on setting up loans between banking institutions and business owners in need?

“Right now it seems like here in Houston, we have been a little less affected than elsewhere in the country,” says Carl Nicchio, vice president of business banking and business sales officer for Wells Fargo Bank in Houston. “Although Houston has fared better than other cities in the United States, it’s feeling the effects of the economy through contact with consumers worldwide and the challenges they are facing.”

Smart Business asked Nicchio why Houston seems to be the exception rather than the norm.

What has been your experience with potential customers and Wells Fargo?

Network news shows have been talking about what Wells Fargo has been doing in light of the national banking crisis. So as an outside salesperson who walks into a new business, my calling card has already been dropped by people who don’t even work for the bank.

Wells Fargo never deviated from its conservative roots, which has helped immensely in a time when other banks are crumbling. People never talked about the company’s reputation before, although they are starting to talk about it now.

Is Houston still ahead of the tough economic times being experienced around the world?

Locally things are still going well, although some are beginning to wonder when things are going to start to slow down. Every day I drive through different parts of the city and I see construction still going on and I see businesses transacting business as usual. We know that people are cutting back on extravagant purchases and being more cautious with their money, but here in Houston it’s still business as usual.

How have the tumbling gas prices affected the Houston economy?

Gasoline here is in the $1.70s. But after paying more than $4 a gallon, the savings we are seeing now seem substantial. I think the lower prices are a temporary thing and that the prices will eventually go back up. I don’t think we’ll get back into the $4-a-gallon range, but I think $3.50 a gallon is very realistic eventually.

We work with several customers whose businesses must budget for gasoline costs in 2009 and they were budgeting $7 and $8 a gallon for gas. We told them we could hedge their gasoline price at $5 a gallon so that they could set their budget and know for sure their cost for gasoline would never go above $5 a gallon, even if the actual cost went much higher.

But now we will go back and adjust the hedge cost. We are still providing the same service, just on a different scale. The lowering of the price of gas has allowed them to better budget their funds.

How will a new presidential administration affect the Houston economy?

We don’t anticipate any rupture with the past. The new administration appears to be well balanced in its makeup with an emphasis on continuity.

Wells Fargo is a well-established company that prides itself on its commitment to its customers and helping them achieve success. Whatever the challenges of the current environment, our company feels it has the tools and resources to help our customers, both business and consumer, weather the storm and prosper.

CARL NICCHIO is vice president of business banking and business sales officer for Wells Fargo Bank in Houston. Reach him at (832) 251-5507 or