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Wells Fargo plans to keep Wachovia investment unit

In a reversal of previous statements, Wells Fargo is going to hang onto some of Wachovia’s investment banking operations, renaming the business Wells Fargo Securities.

When Wells Fargo acquired Wachovia last year, the company said it planned to sell off or shut down Wachovia’s riskier, investment banking operations, which were considered incompatible with Wells Fargo’s typically conservative, play-it-safe nature. reports Wells Fargo has just pulled a 180-degree reversal, however, and now says it will keep some of those operations. “[A] picture has slowly emerged of a firm that drank the profit Kool-Aid and wants another sip.”

Investment banks differ from commercial banks in that they make their money primarily by wheeling and dealing in stocks, bonds and other financial markets rather than earning from fees and interest on customer loans and deposits.

That storefront, customer business has always been Wells Fargo’s focus, and it isn’t abandoning that. But the company said today it is reorganizing Wachovia’s investment banking business as Wells Fargo Securities.

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The reaction from analysts has been mixed. Some say Wells would have been foolish to throw away the opportunity. But others warn that Wells may be “out of their league” in a sector already dominated by JPMorgan, Goldman Sachs and Bank of America.