Wells Fargo Targetsโ Growth Following Asset Cap Lift
Wells Fargo is shifting itsโค focus toward expansion and โimproved returnsโค after the Federal Reserve removed an asset cap imposed in Februaryโข 2018.โ The cap, stemming โฃfrom a scandal involvingโฃ the opening of unauthorized customer accounts, โขhad restricted the โbank’s ability to grow its assets beyond โค2017โฃ levels โuntil “widespread consumer โฃabuses” were addressed.
“For continued higher โgrowthโข and returns,” Wellsโ Fargo Chairman andโ CEO charlie Scharf stated during the bank’s โquarterly earnings call on Tuesday, October 14th. โ
the removal of the asset โcap,effective June 3rd,marks a turning point for theโค bank,which has spent the intervening years strengthening its โrisk and control infrastructure. Sinceโฃ 2019,Wells Fargo has had 13 consent orders terminated,and the bank asserts it is “a differentโ company than we were five years ago,”โค as detailedโ in a presentation releasedโค Tuesday.
wells Fargo has streamlined its operations by divesting fromโ or exiting 12 businesses to concentrate on its โcore franchise.โค The bank has also focused on expense reduction and reinvestment in personnel, technology, and productโข development.
Looking forward,Wells Fargo plans to leverage its franchise scale and product โฃofferings โto drive revenue growth,enhance efficiency,and prioritize investments in high-return areas like credit cards,wealth management,and corporateโค and investment banking.
Scharf outlined aspiring goals for the bank, stating Wells Fargo aspires โขto become the leading U.S. consumer and small business bank andโฃ wealth manager,โ the top U.S. โคbank for businesses of all sizes,and a top five U.S. investment bank. “We expect allโ of our businesses to โeventually โgenerate returns and growth equalโ to our best competitors, while continuing to investโข for โคthe longer โterm,” he added.
Currently, Wells Fargo holds significant market positions, ranking No. 3 in deposit share in consumer banking and lending,โฃ no. 3 among large bank peersโ in financial advisors, No. 4 in wealth client assets,No.โฃ 2 in U.S. corporate and investment loans, No. 6 in U.S. investment banking marketโ share, No. 2 in bank commercial real estate loanโ portfolio, and No. 1 in left lead arranger for middle market and leveraged loans.
Scharf emphasized the bank’s readiness to capitalizeโ on the lifted regulatory constraints. “We have the scale necessaryโ in all of these businesses today,” he โขsaid.โ “Weโ have a strong and disciplined managementโ team that has proven it can execute on our priorities. And with the regulatory constraints lifted, we have more degreesโฃ of freedom to grow and achieve our goals.”
