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Wells Fargo's Internal Probe Reveals Impact on Small Firms
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Following Wells Fargo & Company’s (WFC - Free Report) internal investigation results, which brought into limelight some employees’ malpractices that reported false customer sales numbers, the U.S. lender now plans to streamline its credit card processing business, Wall Street Journal reported.
Such revelation brings into light the sales scandal that led the banking giant to enter into a $185-million settlement in Sep 2016 for resolving regulators’ claims of illegally opening millions of unauthorized accounts.
Wells Fargo’s internal enquiry reveals employees forcing some small firms to enter into expensive contracts with the bank as part of its aggressive sales strategy.
On an earnings conference call in January, President and CEO, Tim Sloan commented, “We've made progress on evaluating potentially unauthorized credit card accounts including any impact to customers' credit scores and analysis of credit signatures to verify authorization. We want to identify anyone who was negatively impacted so we can make things right.”
The allegation led to many setbacks involving the bank’s shattered image, numerous lawsuits, triggered federal and state investigations, congressional hearings and the bank’s former CEO – John Stumpf – losing his job. Further, suspension of business relations of the bank with states, including Illinois and California, were noted.
Hence, post scandal, the bank undertook a number of steps to restore its reputation. It initiated an internal probe and hired a consultant to review its sales practices. Moreover, management proposed to eliminate sales goals for its retail banking business earlier than planned.
While the current crisis at Wells Fargo will take some time to alleviate, we believe that consistent growth in loans and deposits, and expansion moves should support its future prospects.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold).
Shares of Wells Fargo gained 21.3% over the last six months, underperforming 26.4% growth recorded by the Zacks categorized Banks – Major Regional industry.
Northern Trust Corporation (NTRS - Free Report) has been witnessing upward estimate revisions for the last 30 days, with the company’s shares rising nearly 19.1% over the last six months. It presently holds a Zacks Rank #2.
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the last six months, the company’s share price has been up more than 43%. It also carries a Zacks Rank #2.
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Wells Fargo's Internal Probe Reveals Impact on Small Firms
Following Wells Fargo & Company’s (WFC - Free Report) internal investigation results, which brought into limelight some employees’ malpractices that reported false customer sales numbers, the U.S. lender now plans to streamline its credit card processing business, Wall Street Journal reported.
Such revelation brings into light the sales scandal that led the banking giant to enter into a $185-million settlement in Sep 2016 for resolving regulators’ claims of illegally opening millions of unauthorized accounts.
Wells Fargo’s internal enquiry reveals employees forcing some small firms to enter into expensive contracts with the bank as part of its aggressive sales strategy.
On an earnings conference call in January, President and CEO, Tim Sloan commented, “We've made progress on evaluating potentially unauthorized credit card accounts including any impact to customers' credit scores and analysis of credit signatures to verify authorization. We want to identify anyone who was negatively impacted so we can make things right.”
The allegation led to many setbacks involving the bank’s shattered image, numerous lawsuits, triggered federal and state investigations, congressional hearings and the bank’s former CEO – John Stumpf – losing his job. Further, suspension of business relations of the bank with states, including Illinois and California, were noted.
Hence, post scandal, the bank undertook a number of steps to restore its reputation. It initiated an internal probe and hired a consultant to review its sales practices. Moreover, management proposed to eliminate sales goals for its retail banking business earlier than planned.
While the current crisis at Wells Fargo will take some time to alleviate, we believe that consistent growth in loans and deposits, and expansion moves should support its future prospects.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold).
Shares of Wells Fargo gained 21.3% over the last six months, underperforming 26.4% growth recorded by the Zacks categorized Banks – Major Regional industry.
Stocks to Consider
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 30 days. Further, the stock surged over 37% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Northern Trust Corporation (NTRS - Free Report) has been witnessing upward estimate revisions for the last 30 days, with the company’s shares rising nearly 19.1% over the last six months. It presently holds a Zacks Rank #2.
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the last six months, the company’s share price has been up more than 43%. It also carries a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>