Wells Fargo still expects to spend millions of dollars due to various investigations and regulatory inquiries about the company’s fake account scandal.
Speaking during Goldman Sachs’ financial services conference on Tuesday (Dec. 6), Wells Fargo Chief Executive Tim Sloan reiterated what Wells Fargo has already said about the cost of the scandal. According to a report by The Wall Street Journal, the executive said at the confab that a cost of tens of millions of dollars seems “reasonable” based on what it knows as of today. “It’s the upper end of our range from an efficiency standpoint,” he was quoted as saying.
What’s more, Sloan acknowledged that the fake account scandal could impact the retail bank’s results, partly because of changes in the incentives and compensation employees receive. “There could be an impact,” he said. “You see that in fourth quarter numbers as we transition.”
The scandal may also impact Wells Fargo’s submission in 2017 for capital returns under the government’s stress test and capital planning process. “As we have stressed our capital plan for operating losses, we’ve included some pretty draconian scenarios that would encompass what we’ve seen today in terms of reputational risk and other related costs with retail sales practices,” Sloan said, according to WSJ.
Meanwhile, Seeking Alpha reported Sloan also said he doesn’t see anything wrong with cross-selling. As for how Wells Fargo is fairing in different businesses, Sloan said the bank has pulled back a bit in the auto lending market, while the credit card business is seeing growth. November trends for the retail segment are similar to October, he said, according to Seeking Alpha.
Ever since the Consumer Financial Protection Bureau logged its biggest fine ever against Wells Fargo for creating fake customer accounts, the bank has been reeling. It ousted its former CEO, John Stumpf, and is facing lawsuits and regulator inquiries.