Wells Fargo Targets Growth Following Asset Cap Lift
Wells Fargo is shifting its focus toward expansion and improved returns after the Federal Reserve removed an asset cap imposed in February 2018. The cap, stemming from a scandal involving the opening of unauthorized customer accounts, had restricted the bank’s ability to grow its assets beyond 2017 levels until “widespread consumer abuses” were addressed.
“For continued higher growth and returns,” Wells Fargo Chairman and CEO charlie Scharf stated during the bank’s quarterly earnings call on Tuesday, October 14th.
the removal of the asset cap,effective June 3rd,marks a turning point for the bank,which has spent the intervening years strengthening its risk and control infrastructure. Since 2019,Wells Fargo has had 13 consent orders terminated,and the bank asserts it is “a different company than we were five years ago,” as detailed in a presentation released Tuesday.
wells Fargo has streamlined its operations by divesting from or exiting 12 businesses to concentrate on its core franchise. The bank has also focused on expense reduction and reinvestment in personnel, technology, and product development.
Looking forward,Wells Fargo plans to leverage its franchise scale and product offerings to drive revenue growth,enhance efficiency,and prioritize investments in high-return areas like credit cards,wealth management,and corporate and investment banking.
Scharf outlined aspiring goals for the bank, stating Wells Fargo aspires to become the leading U.S. consumer and small business bank and wealth manager, the top U.S. bank for 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,” he added.
Currently, Wells Fargo holds significant market positions, ranking No. 3 in deposit share in consumer banking and lending, no. 3 among large bank peers in financial advisors, 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 in left lead arranger for middle market and leveraged loans.
Scharf emphasized the bank’s readiness to capitalize on the lifted regulatory constraints. “We have the scale necessary in all of these businesses today,” he said. “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.”
