what steps has wells fargo taken to prevent another scandel
New York (CNN Business)Wells Fargo is however being haunted by its history of ripping off customers.
More than four years afterwards the Wells Fargo (WFC) fake-accounts scandal erupted, the banking company reported Friday some other $321 meg of quarterly losses tied to client refunds. That brings Wells Fargo'southward 2020 total for what information technology calls client "remediation" to a staggering $2.2 billion.
Wells Fargo did non specify which of its many scandals were responsible for the latest refunds, which bank executives had previously suggested were in the rearview mirror. Instead, the depository financial institution said the money is "primarily for a variety of historical matters." That could include anything from the millions of imitation accounts Wells Fargo admitted to opening, to forcing customers to pay for unneeded auto insurance or charging unnecessary mortgage fees.
The losses underscore how Wells Fargo is still existence dogged by what the Federal Reserve has called "widespread customer corruption."
Charlie Scharf, Wells Fargo's fourth CEO since the fall of 2016, acknowledged the toll on the bank'south bottom line.
"Our results continued to exist impacted by the unprecedented operating environment and the required work to put our substantial legacy issues backside us," Scharf said in a statement.
Wells Fargo has repeatedly signaled confidence that it had turned the page on its scandals. In July, John Shrewsberry, its old main financial officer, said the "worst" was over in terms of customer refunds. Then the banking concern reported some other $961 meg of remediation in the third quarter.
In October, Shrewsberry acknowledged to reporters that his earlier prediction was "incorrect," only added that the bank believed it has "now fully deemed for what it takes to close these things out." That, too, turned out not to be the case.
Mike Santomassimo, Wells Fargo's new CFO, told reporters on Friday that the procedure has dragged out in part because it sometimes involves going back "many years" across unlike platforms and systems, some of which accept inverse over time.
"It can get pretty complicated and circuitous," said Santomassimo, who took over as CFO last year.
Former Wells Fargo executives go along to go punished past regulators for their behavior at the bank. The Office of Comptroller of the Currency appear Friday a $3.five million fine against James Strother, the bank's one-time general counsel. The OCC cited Strother's role in Wells Fargo's "systematic sales practices misconduct." The bureau said last year it was seeking a $five one thousand thousand fine against Strother. Equally role of the settlement, Strother has agreed to cooperate on other potential OCC investigations into Wells Fargo.
Another $16 billion of buybacks
Despite its ongoing legal troubles, Wells Fargo managed to grow its fourth-quarter profit by 5% to $3 billion. That's because in the prior-year period Wells Fargo set aside $ane.5 billion for litigation expenses linked to its scandals.
But the bank disappointed Wall Street past reporting a ten% slide in revenue to $17.9 billion. The bank'southward shares fell more than three% in premarket trading, eating into its 2021 gains. Last yr, Wells Fargo lost 44% of its value, far outpacing the losses amid other large banks.
As it has done in contempo years, Wells Fargo is leaning on share buybacks to placate frustrated shareholders. The banking concern boosted its buyback program by another 500 million shares. At current prices, that translates to more than than $xvi billion worth of buybacks.
The banking concern is actually hurting from extremely low interest rates, which make information technology hard for lenders to make money. Cyberspace interest income, a cardinal metric of profitability, plunged 17% because of low rates and fewer loans.
Wells Fargo suffered a 26% quarter-over-quarter decline in markets acquirement, driven by an across-the-board slump in trading volumes. Past contrast, rival JPMorgan Chase (JPM) reported a record quarterly profit Friday, additional by its Wall Street arm.
Hundreds of branches are endmost
Unlike its rivals, Wells Fargo can't outrun depression rates past either lending more or spending less. That'south considering Wells Fargo is still operating under an unprecedented asset cap imposed by the Fed three years ago. Those sanctions limit Wells Fargo's ability to lend and requires it to spend more to resolve its compliance problems.
Wells Fargo reported boilerplate loans of $900 billion, downwards 6% from a year earlier. That includes a sharp 15% decline in loans to businesses.
After setting aside $14 billion to cushion against bad loans during the first three quarters, Wells Fargo is no longer stockpiling cash. The bank modestly trimmed its reserve levels during the terminal 3 months of 2020, underscoring the improved economic outlook for the US economic system.
The banking company is besides nether force per unit area from Wall Street to cutting costs, and aims to cut another $ane.v billion of expenses in 2021, which will include laying off workers.
Over the side by side iii to four years, Wells Fargo said it hopes to eliminate $eight billion of expenses in diverse means. The bank closed 329 branches last year and is planning to shut another 250 in 2021.
Like other major companies, Wells Fargo is also rethinking its office space. The banking company plans to cutting its 46 meg square anxiety of office existent estate past xv% to 20% by the end of 2024.
Source: https://www.cnn.com/2021/01/15/investing/wells-fargo-bank-earnings-scandal/index.html
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