Wells Fargo Now Plans to Operate Under Growth Ban Through 2019
(Bloomberg) -- Wells Fargo & Co. is planning to operate under a Federal Reserve asset cap through the end of 2019, rather than just the first half of the year, as it takes longer than anticipated to correct issues in its consumer business.
“To have enough time to incorporate this feedback in our plans in a thoughtful manner and adopt and implement the final plans as accepted by the Federal Reserve and complete the third-party reviews, we’re now planning to operate under the asset cap through the end of 2019,” Wells Fargo Chief Executive Officer Tim Sloan said Tuesday on an earnings call with analysts.
The San Francisco-based bank originally said it believed it could meet the requirements of the consent order by the end of 2018, and last May said it planned on operating under the asset cap through the first half of 2019.
The bank’s shares extended their decline after Sloan’s comments and were down 2.7 percent at 10:53 a.m. in New York.
As her final act as chair of the Federal Reserve, Janet Yellen last year barred Wells Fargo from growing total assets beyond their level at the end of 2017 until it corrects its pattern of consumer abuses and other lapses to the regulator’s satisfaction. The list of lapses has grown since the ban was issued and, over the summer, the Federal Reserve rejected parts of the bank’s plan to turn itself around and prevent further missteps.
The bank has faced regulatory scrutiny, fines and lawsuits since a scandal erupted in 2016 on the revelation that bank employees may have opened millions of fake accounts to meet sales goals.
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