Wells Fargo wrote off $294 million in loans held by its private banking clients who were invested in Bernard Madoff's alleged $50 billion Ponzi scheme, the bank revealed in its forth quarter earnings announcement.

Overall, Wells reported a $2.8 billion loss for the quarter thanks mainly to significant credit write downs and market related losses.

The loss compared to a net income gain of $1.36 billion during the same period a year ago.

The firm also announced a separate $11.2 billion loss for Wachovia, the financial services firm it acquired at the end of last year.

It said the acquisition of Wachovia was completed on December 31 and therefore Wachovia’s results are not consolidated in Wells’ income statement.

Despite the losses Wells’ share price rose 31 per cent in New York trading after the president and chief executive of the NYSE listed company, John Stumpf, said the firm would maintain its 34c per share dividend and not dip into federal aid like many of its competitors.

Wealth management accounted for one of the only gains generated by the respective firms even with the Madoff related write downs.

Wells said its Private Bank achieved 10 per cent revenue growth and 20 per cent growth in pre-tax pre-provision profit from fourth quarter 2007.

It also said Wachovia advisors increased sales into the firm’s proprietary banking products - new flows to Wachovia funds were up $1.4 billion in the fourth quarter versus a net outflow of $11.7 billion in the previous third quarter, according to the firm.

Wells’ acquisition of Wachovia at the end of last year included the purchase of Wachovia’s Private Bank, servicing clients with between $25,000 and $5 million of investable assets; a third party-branded family office, Calibre, catering to clients in the $50 million and above client category; Wachovia Securities, which employs around 14,600 representatives who provide transactional-based advisory services; and a “Wealth Markets” business, which advises clients in the $5 million - $50 million of investable assets range.

Wells Fargo’s existing private bank focuses on clients in the $1 million and $50 million client category range.

Wells purchased Wachovia for $12.7 billion on December 31 after the two firms initially agreed to the deal in October.