Latest news with #assetcap
Yahoo
4 days ago
- 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
4 days ago
- 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.
New York Times
5 days ago
- Business
- New York Times
Fed Removes Shackle Imposed on Wells Fargo After Series of Scandals
In early 2018, the Federal Reserve hit Wells Fargo with an unprecedented penalty for a yearslong record of misconduct: an asset cap that prevented the bank from growing. On Tuesday, the Fed lifted that restriction. Wells Fargo has improved its internal governance and risk management enough to be released from its fetters, the regulator said. The end of the asset cap reflects the bank's 'focused management leadership, strong board oversight and strict supervision,' said Michael S. Barr, a Fed governor who recently ended his service as the board's vice chair for supervision. He said the three improvements 'will need to continue for the firm to have a sustainable approach.' Wells Fargo, based in San Francisco, hailed the end of a sanction that has shadowed the bank for more than seven years. Charles W. Scharf, the bank's chief executive, called it 'a pivotal milestone' in the company's transformation. 'We are a different and far stronger company today because of the work we've done,' he said. Wells Fargo said it would grant nearly all of its 215,000 full-time workers an award valued at $2,000. For most, the prize will come in the form of a restricted stock grant, which the company described as a way to give its workers 'an opportunity to own a part of Wells Fargo and hopefully benefit from our future success.' Mr. Scharf took on the top job at Wells Fargo in 2019, after the bank's series of scandals toppled two chief executives. In 2016, federal regulators and local officials in California revealed that the bank's employees had for years created bank accounts for unwitting customers, without their consent, to meet aggressive sales goals. That discovery was followed by others, including mistakes that led to improper home foreclosures and auto repossessions. The bank paid billions of dollars in fines and billions more in refunds to customers it had harmed. One former top executive — Carrie L. Tolstedt, who served for years as Wells Fargo's head of retail banking — faced criminal charges from the Justice Department. Through a plea deal, she avoided a prison sentence. The asset cap prevented Wells Fargo from keeping up with rivals. Over the course of the sanction, its ranking among the largest U.S. banks fell from third to fourth, with assets of around $1.9 billion. The bank will now be able to expand its lending, increase its deposits and potentially acquire other financial providers. Its stock price rose about 3.7 percent in after-hours trading after the Fed announcement. Wells Fargo was the first bank to face such a stiff penalty from federal bank regulators, but it's no longer the only one. Last year, the Office of the Comptroller of the Currency imposed an asset cap on TD Bank for violating anti-money-laundering laws. 'No one thought it would last this long,' Ian Katz, an analyst at Capital Alpha Partners, said of the Wells Fargo asset cap. Its removal 'signals both the bank's progress and the Fed's increasingly bank-friendly mood.'
Reuters
5 days ago
- Business
- Reuters
Fed lifts Wells Fargo's asset cap, citing progress from sales scandal
WASHINGTON, June 3 (Reuters) - The U.S. Federal Reserve announced on Tuesday that Wells Fargo (WFC.N), opens new tab will no longer have to operate under a $1.95 trillion asset cap the regulator imposed on the bank in 2018 following its long-running sales practices scandal. The Fed said in a statement that the bank had made "substantial progress" in addressing its deficiencies, including improving its governance and risk management programs, and completing a third-party review of its overhaul. "The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies and that the bank has fulfilled the conditions required for removal of the growth restriction," the Fed said in a statement. The Fed board voted unanimously to lift the restriction, which was the first time the central bank had directly ordered a bank to stop growing in order to address widespread shortcomings.
Bloomberg
5 days ago
- Business
- Bloomberg
Wells Fargo's Asset Cap Lifted by Fed, Paving Way for Growth
Wells Fargo & Co. finally escaped a Federal Reserve asset cap that has restricted its size for more than seven years, unleashing the firm from the unprecedented punishment in a major win for Chief Executive Officer Charlie Scharf. The Fed said in a statement Tuesday that Wells Fargo met all conditions required by an enforcement action imposed on the bank in 2018 to remove the restriction. The central bank completed its review of Wells Fargo's remediation efforts and third-party assessments, as well as its own assessment of the bank's corporate governance and risk management programs, it said.
