Will this merger succeed?

Wells Fargo's acquisition of Wachovia looks as if it will create synergies:

On the positive side, the merger has doubled the number of Wells branches to more than 6,600, giving it a footprint that only Bank of America comes close to matching. Wells and Wachovia were “mirror images” of each other, says Mr Stumpf, with Wells strong west of the Mississippi and Wachovia powerful to the east.

This gives Wells huge deposit-gathering power, as well as an opportunity to pump more products to Wachovia customers, who typically have four to five products with the bank, compared with almost six for Wells clients. Mr Buffett sees echoes of Wal-Mart in Wells’s retailing ethic. The merger gives Wells a formidable position in areas such as mortgages. In the first half of the year it handled a staggering 23.5% of all new home loans, according to Inside Mortgage Finance, a newsletter.

But by buying an undercapitalized bank, Wells Fargo reduced its own capitalization:

Among big banks, Wells scores poorly on Tier-1 common equity, the core-capital measure favoured by regulators (see chart). It is well below the 6% level that is likely to be the minimum required in future. And at some point it will have to repay the $25 billion of government capital it got last year.