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Wells Fargo (WFC) Gears Up for New Pay Plan in Retail Wing
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Wells Fargo & Company (WFC - Free Report) is set to launch a new compensation structure for its scam tainted retail-banking unit this week. The news, first reported by The Wall Street Journal, stated that the new pay plan will focus on customer service, customer usage and growth in primary balances.
Mary T. Mack – senior executive vice president of Community Banking at Wells Fargo – will host an event in Dallas, this week, regarding the compensation overhaul. Mary Eshet, a Wells Fargo spokesperson, noted that the bank intends to share the new plan with employees, which “eliminates sales goals, measures performance based on customer experience and adds more oversight and risk” management.
The compensation plan for the retail wing had drawn wide criticism, following the San Francisco-based banking giant’s $190-million settlement in Sep 2016 to resolve regulators’ claims of illegally opening millions of unauthorized accounts.
Several former and current Wells Fargo employees had said that the company levied strict quotas on employees and put pressure on them to impose up to eight banking products on customers, irrespective of the customers’ requirement. In fact, Wells Fargo stringently enforced and closely monitored sales quota system, which in a way, forced employees to adopt fraudulent measures in order to protect their employment. Notably, amid the political and public outrage, the bank announced elimination of product sales goals for its retail bankers last October.
The sales scam did not have material effect in the third-quarter 2016 results, however it undoubtedly keeps the company’s financials under pressure for the near term. In fact, Wells Fargo recorded a disappointing retail banking customer activity as it experienced a year-over-year plunge of 44% and 41% in new account openings in Oct 2016 and Nov 2016, respectively.
The retail banking unit’s performance will be a key area to watch, when Wells Fargo releases its fourth-quarter and full-year 2016 results this Friday.
Stock Performance
The sales scandal has considerably weighed on Wells Fargo’s shares. The post-election euphoria and the December Fed rate hike were not enough to counter this pressure. Over the past one year, the company’s shares increased 9.9%, substantially underperforming the 32.3% gain for the Zacks categorized Major Regional Banks industry.
The current crisis at the company will take some time to alleviate. However, constant increase in loans and deposits and expansion moves should support Wells Fargo’s growth. Also, the rising rate environment is set to ease the company’s margin pressure.
Currently, Wells Fargo carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Comerica Incorporated (CMA - Free Report) : Comerica has been witnessing upward estimate revisions ahead of its fourth-quarter 2016 results. Over the past 30 days, the Zacks Consensus Estimate for the quarter advanced 1.1% to 96 cents. Also, for 2016, it inched up slightly to $2.98. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Citigroup Inc. (C - Free Report) : Over the past 30 days, the Zacks Consensus Estimate for fourth-quarter 2016 advanced 1.8% to $1.11 and nearly 1% to $4.73 for 2016. The company has a Zacks Rank #2.
The PNC Financial Services Group, Inc. (PNC - Free Report) : The Zacks Consensus Estimate for fourth-quarter 2016 inched up 1.1% to $1.85, over the past 30 days. In addition, it moved up slightly to $7.19 for 2016. The company also carries a Zacks Rank #2.
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Wells Fargo (WFC) Gears Up for New Pay Plan in Retail Wing
Wells Fargo & Company (WFC - Free Report) is set to launch a new compensation structure for its scam tainted retail-banking unit this week. The news, first reported by The Wall Street Journal, stated that the new pay plan will focus on customer service, customer usage and growth in primary balances.
Mary T. Mack – senior executive vice president of Community Banking at Wells Fargo – will host an event in Dallas, this week, regarding the compensation overhaul. Mary Eshet, a Wells Fargo spokesperson, noted that the bank intends to share the new plan with employees, which “eliminates sales goals, measures performance based on customer experience and adds more oversight and risk” management.
The compensation plan for the retail wing had drawn wide criticism, following the San Francisco-based banking giant’s $190-million settlement in Sep 2016 to resolve regulators’ claims of illegally opening millions of unauthorized accounts.
Several former and current Wells Fargo employees had said that the company levied strict quotas on employees and put pressure on them to impose up to eight banking products on customers, irrespective of the customers’ requirement. In fact, Wells Fargo stringently enforced and closely monitored sales quota system, which in a way, forced employees to adopt fraudulent measures in order to protect their employment. Notably, amid the political and public outrage, the bank announced elimination of product sales goals for its retail bankers last October.
The sales scam did not have material effect in the third-quarter 2016 results, however it undoubtedly keeps the company’s financials under pressure for the near term. In fact, Wells Fargo recorded a disappointing retail banking customer activity as it experienced a year-over-year plunge of 44% and 41% in new account openings in Oct 2016 and Nov 2016, respectively.
The retail banking unit’s performance will be a key area to watch, when Wells Fargo releases its fourth-quarter and full-year 2016 results this Friday.
Stock Performance
The sales scandal has considerably weighed on Wells Fargo’s shares. The post-election euphoria and the December Fed rate hike were not enough to counter this pressure. Over the past one year, the company’s shares increased 9.9%, substantially underperforming the 32.3% gain for the Zacks categorized Major Regional Banks industry.
The current crisis at the company will take some time to alleviate. However, constant increase in loans and deposits and expansion moves should support Wells Fargo’s growth. Also, the rising rate environment is set to ease the company’s margin pressure.
Currently, Wells Fargo carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Comerica Incorporated (CMA - Free Report) : Comerica has been witnessing upward estimate revisions ahead of its fourth-quarter 2016 results. Over the past 30 days, the Zacks Consensus Estimate for the quarter advanced 1.1% to 96 cents. Also, for 2016, it inched up slightly to $2.98. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Citigroup Inc. (C - Free Report) : Over the past 30 days, the Zacks Consensus Estimate for fourth-quarter 2016 advanced 1.8% to $1.11 and nearly 1% to $4.73 for 2016. The company has a Zacks Rank #2.
The PNC Financial Services Group, Inc. (PNC - Free Report) : The Zacks Consensus Estimate for fourth-quarter 2016 inched up 1.1% to $1.85, over the past 30 days. In addition, it moved up slightly to $7.19 for 2016. The company also carries a Zacks Rank #2.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>