Wells Fargo Shifts Focus to Growth and Returns After Removal of Regulatory Constraints

A little over four months after the removal of an asset cap that had been imposed by the Federal Reserve, Wells Fargo aims to shift the conversation from the improvements it made to earn that achievement to the work it has done to improve growth and returns.

“Wells Fargo, without the regulatory constraints and with the changes we have made, is a significantly more attractive company than what we were several years ago, and we believe this positions us for continued higher growth and returns,” Wells Fargo Chairman and CEO Charlie Scharf said Tuesday (Oct. 14) during the bank’s quarterly earnings call.

The asset cap that was removed by the Federal Reserve on June 3 was imposed in February 2018 as part of an enforcement action after a scandal that included Wells Fargo opening accounts without customer permission. The asset cap prevented the bank from growing its assets beyond its 2017 level until it addressed “widespread consumer abuses.”

While Wells Fargo enhanced its risk and control infrastructure to have 13 consent orders terminated since 2019, it has also made “substantial progress” in other areas during that period of time and is “a different company than we were five years ago,” the bank said in a presentation released Tuesday.

Wells Fargo has simplified its business by selling or exiting 12 businesses to focus on its core franchise; reduced expenses; and invested in people, technology and products to improve its capabilities and offerings, according to the presentation.

Looking ahead, the bank sees opportunities to grow revenue through the scale of its franchise and the breadth and quality of its products and capabilities; continue to boost its efficiency; and invest in businesses with higher returns, such as credit card, wealth management, and corporate and investment banking, per the presentation.

Scharf said during Tuesday’s earnings call that Wells Fargo now aspires to be the top U.S. consumer and small business bank and wealth manager, the top U.S. bank to businesses of all sizes, and a top five U.S. investment bank.

“We expect all of our businesses to eventually generate returns and growth equal to our best competitors, while continuing to invest for the longer term,” Scharf added.

According to the presentation, Wells Fargo is currently ranked No. 3 in deposit share in consumer banking and lending, No. 3 as financial advisors among large bank peers, No. 4 in wealth client assets, No. 2 in U.S. corporate and investment loans, No. 6 in U.S. investment banking market share, No. 2 in bank commercial real estate loan portfolio, and No. 1 left lead arranger for middle market and leveraged loans.

“We have the scale necessary in all of these businesses today,” Scharf said during the call. “We have a strong and disciplined management team that has proven it can execute on our priorities. And with the regulatory constraints lifted, we have more degrees of freedom to grow and achieve our goals.”