Latest news with #assetcap
Yahoo
31-07-2025
- Business
- Yahoo
Wells Fargo board to appoint CEO Scharf as chairman
(Reuters) -Major U.S. lender Wells Fargo said on Thursday its board of directors intends to appoint CEO Charlie Scharf as chairman. The move comes after Scharf led Wells Fargo to be released from a punitive, seven-year-long $1.95 trillion cap on its assets last month. The board also awarded Scharf a one-time special equity grant consisting of $30 million in restricted share rights and stock options.
Yahoo
30-07-2025
- Business
- Yahoo
Post-asset cap, Wells chases government banking growth
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. With Wells Fargo freed from its asset cap, the lender's government banking team is squarely focused on growing both its client base and deepening its relationships with those customers. 'Our limitations are behind us,' said Elena Gallo, head of the government banking unit within Wells' commercial bank, in a recent interview. 'The team feels that lightness about them.' In June, the Federal Reserve lifted the $1.95 trillion asset cap the bank had operated under since 2018. The cap was tied to the lender's 2016 fake-accounts scandal, in which the bank's employees opened millions of fake customer accounts to meet sales targets. Now, the bank is gunning for growth, and executives have said there are opportunities to do so in each of the bank's businesses. Wells Fargo's government banking team serves about 3,000 clients in 43 states and Washington, D.C. The San Francisco-based bank serves clients across the spectrum, from the smallest villages to the state of California, said Gallo, who took the helm of the team last October. Gallo's team delivers global payments and liquidity services, which covers payables and receivables – government clients paying vendors and employees, and constituents paying taxes, fees and fines. The bank also uses its balance sheet for capital projects, when clients need loans, and Gallo's team works in partnership with the bank's public finance team. In government banking, 'we have felt it, reputationally,' Gallo said of the asset cap and the issues that prompted it. Wells Fargo CEO Charlie Scharf has referred to the growth restraint as a 'cloud' or a 'scarlet letter.' On the balance sheet side, the COVID-19 pandemic 'was probably one of our more difficult times,' she said. Government clients 'were loaded with cash' as they received billions of dollars in pandemic relief funds from the federal government, and Wells had to be mindful of its size constraints, she said. Proactive management by the company to keep Wells below the asset cap included identifying areas where executives requested, 'Please make your business smaller,'' Scharf said last year. For Gallo, the experience underscored the importance of strong ties with clients, maintaining those relationships 'during a difficult time.' Freed from the cap, Wells now seeks to grow retail and commercial deposits, Scharf has said, and growth there could fund expansion of other businesses. The lender declined to specify how big the government banking segment is for the company. 'The biggest challenge for WFC's senior management team is going to be the pivot from focusing on fixing the regulatory problems to growing the bank,' RBC Capital Markets analyst Gerard Cassidy wrote in a Monday note. 'Over the next 12-24 months, management will need to transition away from the self-help story over the past six years to a growth story.' Gallo's team seeks to build on the lender's current momentum. In government banking, relationship managers 'want to be able to bring the full bank solution to their clients, and now we're not prohibited in any way from doing that,' Gallo said. That includes using the bank's balance sheet and working closely with public finance partners. Whether it's capital projects or funding to respond to natural disasters, 'we're seeing where we can really lean in and be sure to be there for them,' she said. In Texas, for example, where population growth has exploded, government clients tend to have capital needs as they plan to build roads and schools. Additionally, as those communities expand, Wells seeks to help them respond, by facilitating easier access for constituents to make payments, for example, she said. 'How do we help them look towards becoming more efficient as this population has exploded?' she said. Wells plans to hire relationship managers in growth markets like Texas and California, although Gallo declined to specify how many she's looking to add to her current team of about 70 people. The average tenure of those on her team is about 15 years. Gallo's team is focused on meeting clients where they are — many municipalities or states have built onto antiquated enterprise resource planning or accounting systems, instead of modernizing — while working with them to adapt to technological changes prompted by evolving payment preferences. 'One of the biggest struggles I see in speaking with our clients is technology and having support for it,' she said. Her team is spending a lot of time working with clients on their trajectories to adapt, as the growing constituencies of the largest cities favor digital wallets over checks. 'That's critically important for us to help them get on a path for that,' Gallo said. 'All clients are thinking about that' in conjunction with how their systems are set up today, as constituents increasingly prefer to transact in ways they've become accustomed to elsewhere. Gallo's team works to identify clients' short, medium and long-term goals and tackle them in a phased manner. 'Banks can offer all these great, shiny bells and whistles, but if a client can't account for them correctly, that causes friction. It's not efficient,' she said. Bankers also seek to add value by helping government clients consider fraud protection measures, from moving them to a digital platform to specific measures to ward off fraud, she said. Fraud is 'one of the top things that we consult with our clients on,' she said. 'Nobody wants to be a headline in the newspaper.' 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Forbes
10-06-2025
- Business
- Forbes
Wells Fargo Just Got Unshackled. What Next?
WASHINGTON, DC - MAY 31: A Wells Fargo logo is displayed on a sign at an ATM on May 31, 2025 in ... More Washington, DC. (Photo by) Wells Fargo (NYSE: WFC) stock has increased by 3% over the past week and is up nearly 9% year-to-date. The recent uptick follows the announcement from the U.S. Federal Reserve last week stating that Wells Fargo will no longer be bound by the $1.95 trillion asset cap enforced on the bank's operations due to its prolonged sales practices scandal. The Federal Reserve highlighted that Wells Fargo has made significant strides in rectifying its previous issues, especially in governance and risk management areas. The $1.95 trillion asset cap had compelled the bank to limit its lending and deposit acceptance, resulting in it falling considerably behind competitors like JPMorgan Chase, which currently holds over $4 trillion in assets. Consequently, Wells Fargo altered its strategy to concentrate on businesses that yield higher returns and are less capital-intensive, such as investment banking and advisory services. Although the cap restricted growth, it also motivated the bank to become leaner and more efficient, enhancing its emphasis on risk management and operational discipline. Now that the limitation is removed, Wells Fargo can expand its balance sheet and earnings by acquiring more commercial deposits, which offer less expensive and more stable funding sources that can lower overall capital costs. This could enable the bank to reinvest in areas that benefit from its larger balance sheet. Separately, if you are seeking upside potential with a more stable experience than an individual stock, consider the High Quality portfolio, which has outperformed the S&P and achieved >91% returns since inception. Wells Fargo's Q1 figures were mixed. Net income grew by 6% year-over-year to $4.89 billion, while revenue decreased by 3%. Net interest income, a measure of the earnings from lending activities, fell by 6% year-over-year to $11.50 billion. Noninterest income, which encompasses fees from investment banking, brokerage, and advisory services, rose by 1% to $8.65 billion compared to last year's $8.64 billion. The banking industry has generally adopted a cautious stance regarding the near-term outlook due to geopolitical uncertainties, the U.S. imposing tariffs on trading partners, and concerns about inflation. Fears of inflation have pushed Treasury yields higher, with the 10-year yield exceeding 4.40%, up from 4.01% in early April, while the yield on the 30-year bond stands just below 5%. This may yield mixed consequences for Wells Fargo. Rising rates and market fluctuations could negatively impact the investment banking sector, as these factors frequently result in delays in IPOs, mergers, and acquisition activities. However, on the lending front, higher yields increase the gap between what banks earn from loans and what they pay on deposits, generally improving net interest income and overall profitability, although they could also affect credit quality to some degree. We assess WFC stock to be worth around $71 per share, which is slightly under the current market valuation. Refer to Trefis' estimate for Wells Fargo's valuation.
Yahoo
04-06-2025
- Business
- Yahoo
Wells Fargo shares rise after Fed ends growth freeze
(Reuters) - Wells Fargo shares rose more than 3% in premarket trading on Wednesday, after the U.S. Federal Reserve lifted a longstanding cap on its assets, marking a crucial milestone in the bank's push to rebuild its reputation. The country's fourth-largest bank was operating under a $1.95-trillion asset cap mandated by the Fed in 2018 aimed at restricting its growth until regulators deemed it had fixed its problems dating back to the 2016 fake-accounts scandal. The Fed board voted unanimously to lift the seven-year restriction, which was the first time the central bank had directly ordered a bank to stop growing in order to address widespread shortcomings. "We expect the company to expand in a very controlled manner and within the same risk tolerance it has had," Barclays analysts said in a note. "As such, we would expect incremental growth to linear over time, not exponential. This could be a multi-year journey." The Fed's decision handed a major victory to Wells CEO Charlie Scharf, who had been navigating a maze of consent orders, legal battles and regulatory scrutiny since taking the top job in 2019. During this time, peers thrived. JPMorgan Chase's assets grew by nearly $2 trillion since the start of 2018, while Bank of America expanded its assets by about $1 trillion. Wells has said it wants to grow in areas such as credit cards, wealth management and commercial banking. "A lifting of the asset cap combined with significant investments in many key businesses will drive earnings-per-share growth approaching 20% per year in 2026-2028," Deutsche Bank said. Sign in to access your portfolio
Reuters
04-06-2025
- Business
- Reuters
Wells Fargo shares rise after Fed ends growth freeze
June 4 (Reuters) - Wells Fargo (WFC.N), opens new tab shares rose more than 3% in premarket trading on Wednesday, after the U.S. Federal Reserve lifted a longstanding cap on its assets, marking a crucial milestone in the bank's push to rebuild its reputation. The country's fourth-largest bank was operating under a $1.95-trillion asset cap mandated by the Fed in 2018 aimed at restricting its growth until regulators deemed it had fixed its problems dating back to the 2016 fake-accounts scandal. The Fed board voted unanimously to lift the seven-year restriction, which was the first time the central bank had directly ordered a bank to stop growing in order to address widespread shortcomings. "We expect the company to expand in a very controlled manner and within the same risk tolerance it has had," Barclays analysts said in a note. "As such, we would expect incremental growth to linear over time, not exponential. This could be a multi-year journey." The Fed's decision handed a major victory to Wells CEO Charlie Scharf, who had been navigating a maze of consent orders, legal battles and regulatory scrutiny since taking the top job in 2019. During this time, peers thrived. JPMorgan Chase's (JPM.N), opens new tab assets grew by nearly $2 trillion since the start of 2018, while Bank of America (BAC.N), opens new tab expanded its assets by about $1 trillion. Wells has said it wants to grow in areas such as credit cards, wealth management and commercial banking. "A lifting of the asset cap combined with significant investments in many key businesses will drive earnings-per-share growth approaching 20% per year in 2026-2028," Deutsche Bank said.
