Wells Fargo's latest regulatory rebuke may prolong asset cap punishment, analysts say
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By Manya Saini and Nupur Anand
Sept 13 (Reuters) -Wells Fargo's WFC.N latest regulatory rebuke for insufficient efforts to combat money laundering will probably prolong another ongoing major regulatory punishment that has limited growth at the bank, analysts said.
Despite some progress fixing issues from a 2016 fake accounts scandal, the fresh compliance problems signal Wells Fargo's cleanup efforts may be far from over, and as such the period the bank must stay under an asset cap imposed by the U.S. Federal Reserve is now likely to be extended.
The Office of the Comptroller of the Currency said on Thursday it was putting restrictions on Wells Fargo's ability to expand into risky businesses after it found the bank had insufficient safeguards against money laundering and other illegal transactions.
"This is very surprising given that Wells Fargo had resolved a consent order for anti-money laundering quite recently, in January 2021, after many years of work and expense," Vivek Juneja, an analyst at JPMorgan Securities, wrote in a note.
The order says Wells Fargo will need approval from the OCC to introduce riskier new products or services, as well as providing risk assessment plans even for less risky offerings and a detailed action plan. It did not fine the bank.
"We have been working to address a substantial portion of what's required in the formal agreement, and we are committed to completing the work with the same sense of urgency as our other regulatory commitments," the bank said in a statement on Thursday.
Wells Fargo operates under a $1.95 trillion asset cap that prevents it from growing until regulators deem it has fixed problems dating back to the fake accounts scandal. It still has eight regulatory punishments, called consent orders, that it is working to address.
Fed Chair Jerome Powell said in 2021 that the asset cap would stay in place until the firm had comprehensively fixed its problems. The Fed has not spoken publicly on Wells Fargo's asset cap since then.
"Although an enforcement action against a bank for anti-monetary laundering policies and procedures is unfortunately not that uncommon, it is unique for Wells," KBW analysts led by David Konrad wrote in a note. "It adds uncertainties to the timeline of the asset cap and their expense outlook."
In a regulatory filing last month, the bank had said it was being investigated by government authorities over issues related to anti-money laundering and sanctions programs, which Juneja from JPMorgan said could mean other agencies also taking action.
The 2016 fake accounts scandal led to heightened scrutiny, billions of dollars in penalties, and multiple shareholder lawsuits against the bank, with regulators mandating more oversight.
In February, the OCC lifted a 2016 consent order on the bank's sales practices. At the time, analysts said the move could pave the way for the Fed to lift its consent order as early as this year.
Thursday's knock from regulators is "an unfortunate but not shocking step back in what had otherwise been good forward progress this year on resolving regulatory concerns," Piper Sandler analysts wrote in a report this week.
For other analysts, the outlook for Wells Fargo's regulatory cleanup is still murky.
"We still do not have a clear view of when asset-cap removal would come in any event, much less if additional actions like today's could alter the path further," Jefferies said.
CEO Charlie Scharf has been working to contain the fallout and help resolve the consent orders since he took the top job in 2019.
The asset cap is curtailing Wells Fargo's ability to take in more corporate deposits and expand its trading business, two potential growth areas for the bank, Scharf said earlier this year.
Wells Fargo's stock has risen nearly 7% this year, lagging a 15% jump in a broader S&P 500 bank index .SPXBK.
Reporting by Manya Saini in Bengaluru and Nupur Anand in New York; Editing by Arun Koyyur and Rosalba O'Brien
ताजातरीन समाचार
अस्वीकरण: XM Group के सत्व केवल निष्पादन वाली सेवा और हमारी ऑनलाइन व्यापार सुविधा में पहुँच प्रदान करते हैं, ताकि व्यक्ति वेबसाइट पर या उसके जरिए उपलब्ध सामग्री को देख सके और/या उसका उपयोग कर सके। इसका प्रयोजन इसे बदलना या विस्तार देना नहीं है, न ही वह इसे बदलता या विस्तार देता है। इस तरह की पहुँच हमेशा ही निम्नलिखित के अधीन रहेगी: (1) नियम और शर्तें; (2) जोखिम चेतावनियाँ; और (3) पूर्ण अस्वीकरण। इसलिए ऐसी जानकारी सामान्य सूचना से अधिक कुछ भी नहीं है। विशेष रूप से, कृपया इससे अवगत रहें कि हमारी ऑनलाइन व्यापार सुविधा की सामग्रियाँ न तो किसी चीज का अनुरोध करती हैं, न ही वित्तीय बाजारों में प्रवेश करने की पेशकश ही करती हैं। किसी भी वित्तीय बाजार में व्यापार करने के साथ आपकी पूँजी को उल्लेखनीय जोखिम है।
हमारी ऑनलाइन व्यापार सुविधा में प्रकाशित सभी सामग्रियाँ शैक्षणिक/सूचनात्मक प्रयोजनों मात्र के लिए हैं, और इनमें वित्तीय, निवेश टैक्स या व्यापार सलाह और सुझाव नहीं हैं - न ही ऐसा समझना चाहिए कि इनमें ये सब हैं; न ही इनमें हमारी व्यापार कीमतों का अभिलेख है; न ही इनमें किसी वित्तीय उपकरण में लेन-देन करने का निमंत्रण या अनुरोध है; न ही ये आपको अवांछित वित्तयी प्रोमोशन पेश करती हैं।
इस वेबसाइट में मौजूद कोई भी तृतीय पक्षीय सामग्री, तथा XM द्वारा तैयार की गई सामग्रियाँ, जैसे: अभिप्राय, समाचार, अनुसंधान, विश्लेषण, कीमतें और अन्य सूचनाएँ या तृतीय पक्षों की साइटों के लिंक, "जैसा-है-वैसा" के आधार पर बाजार के बारे में सामान्य टिप्पणी के रूप में उपलब्ध कराई गई हैं, और वे निवेश हेतु सलाह नहीं हैं। जिस हद तक कीसी सामग्री को निवेश अनुसंधान मान लिया जाता है, उस हद तक आपको ध्यान में रखना होगा और इसे स्वीकार करना होगा कि वह सामग्री इस उद्देश्य से और निवेश अनुसंधान की स्वतंत्रता को बढ़ावा देने के लिए कानूनी आवश्यकताओं के मुताबिक, तैयार नहीं की गई है, और इसलिए उसे प्रासंगिक कानूनों और विनियमों के तहत विपणन संप्रेषण माना जाएगा। कृपया सुनिश्चित करें कि आपने गैर-आश्रित निवेश के बारे में हमारी सूचना को पढ़ और समझ लिया है। पीछे दी गई जानकारी के बारे में अनुसंधान और जोखिम चेतावनी यहाँ उपलब्ध है।
