Wells Fargo was once Wall Street’s biggest bank and a favourite of Warren Buffett. He still owns 3% of the company. At its peak, Wells Fargo had a market cap of over $300bn, today that is less than $100bn. The bank traded at a premium to its tangible book value; it was the highest-rated Wall Street bank when using this metric.
A scandal caused the company to lose its premium rating. After the financial crisis of 2008, the bank began to accelerate its cross-selling business. Cross-selling is when the bank uses its access to the customer and cross-sells multiple products to them.
With the push to increase, crossselling eventually got the better of the bank and led to many problems. Staff were heavily rewarded for cross-selling and penalised if they didn’t achieve daily targets. This led to shortcuts, where Wells Fargo’s staff eventually opened accounts on behalf of customers without their consent. In September 2016, Wells Fargo paid a $185m fine for having opened 1.5m checking accounts and issuing 500 000 credit cards without client consent. In February 2020 Wells Fargo settled with the US securities and exchange commission and the US department of justice for a $3bn fine.
Due to the scandal in 2018 the bank was barred by the US Federal Reserve (Fed) from exceeding $2tr in assets. This resulted in the bank having to cut $100bn in assets (normally loans to customers) in 2020 to avoid breaking this rule.
Bu hikaye Finweek English dergisinin 22 October 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Finweek English dergisinin 22 October 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
