Wells Fargo’s corporate banking operations are struggling to bounce back as well as its consumer financial services have done in the wake of a fake account scandal.
A report in Reuters on Wednesday (March 27) said Wells Fargo is struggling to expand its corporate and institutional investor customer base, with revenues at the corporate banking unit declining by 4 percent in 2018. That compares to the average 6 percent yearly revenue increases for corporate banking operations before the scandal.
Wells Fargo had previously acknowledged to investors that while it has been able to retain customers in the wake of the scandal, it is struggling to land new ones. That has been particularly true for its corporate financial services.
“It’s been a little bit more challenging for us to bring in new customers,” said Perry Pelos, Wells’ corporate bank chief, in a previous interview with Reuters.
Relationship building will be an instrumental focus of Wells Fargo’s strategy moving forward as it focuses on landing new corporate customers with a range of complex services, including financing, import-export support, revolving lines of credit, cash management and more.
The ongoing struggles of its corporate banking operations are in contrast to analysts’ recent revelations that Wells Fargo’s consumer-focused operations are beginning to see a revival after the 2016 scandal, which revealed that employees were opening fake accounts on behalf of, and unbeknownst to, clients. The company recently reached a $240 million settlement in that saga.
The most recent quarterly data for Wells revealed a 9 percent increase in auto loan originations, while yearly data showed a 1.2 increase in primary checking accounts in 2018. Yet ongoing skepticism among corporates related to the fake account scandal has proved more difficult for the institution to overcome. According to O’Brien, Wells is aware of the reputational harm it has endured with prospective business customers.
“I’ve certainly been in meetings where it comes up,” he told Reuters.
Last year, unnamed sources told The Wall Street Journal that the company was planning to consolidate its corporate and investment banks to overhaul its strategic approach in corporate banking.