Wells Fargo credit applications fall most since scandal
Wells Fargo & Co. said credit-card applications dropped 55 percent in February from a year earlier, the biggest decline since a scandal involving fake accounts erupted in September.
Retail customers opened 43 percent fewer checking accounts in February, marking the sixth straight month of declines since regulators fined the bank over the creation of unauthorized accounts.
“It will take time for us to work through the changes we are making in our business, but we remain focused on strengthening our relationships with existing customers and building new ones with potential customers,” Mary Mack, head of community banking at San Francisco-based Wells Fargo, said Monday in statement.
Wells Fargo executives have been working since September to extricate the lender from a torrent of public criticism following the scandal in the retail unit that’s cost the firm at least $200 million. The board has sought to hold executives accountable, withholding cash bonuses for eight leaders including Chief Executive Officer Tim Sloan.
Wells Fargo has been releasing monthly data on the retail unit’s performance following the Sept. 8 revelation that employees may have opened as many as 2 million deposit and credit-card accounts over a half decade without customers’ permission. After factoring in fewer business days in February 2017 compared with previous months, the “trends were generally similar to January’s and were within our expectations,” Mack said in the statement.
The lender will likely spend between $40 million and $50 million each quarter on fees for external lawyers, consultants and other professionals who are working to help with the scandal’s aftermath, Chief Financial Officer John Shrewsberry said in a call with analysts to explain the February figures. He said those higher expenditures are pushing the bank to cut elsewhere. The CFO told investors last month that the bank would probably spend about $10 million more per quarter than he forecast Monday.
“It’s hard to imagine” regulators expanding multiple probes already under way “because of all that we’re doing with them,” Shrewsberry said.
Wells Fargo shares fell 1.4 percent to $57.85 at 1:17 p.m. in New York, the second-biggest decline on the 24-company KBW Bank Index. The stock has climbed 5 percent this year, more than the 3.4 percent increase in the index.
Shrewsberry said Wells Fargo’s board is unlikely to release additional findings from its internal investigation before a final report is made public sometime in April.