Embattled Bank Wells Fargo Scrambles to Save its Reputation
Embattled US bank Wells Fargo & Co has recently given up its policy on product sales quotas for their retail bankers on Tuesday and may possibly bring disciplinary action against its bank employees due to its recent fake account scandal that has already cost the bank $190 million in fines and the firing of 5,300 employees Reuters said.
Wells Fargo has been hit penalized by US bank regulators when it was proven that its employees opened more than 2 million unauthorized bank accounts and credit cards for existing customers without their consent in an effort to meet internal sales goals.
US Politicians are demanding an investigation on Wells Fargo's operations and bank regulators are expected to testify in the Senate next week Reuters said.
Wells Fargo has become one of America's bank giants and up until its recent crisis, is the most respected financial institution especially after the 2008 Great Recession because of its decision not to use credit default swaps and collateralized debt obligations.
Reuters said that the company's stock price has lost around 7 percent of their value since last week which made it give up its as the largest U.S. bank by market capitalization to rival JPMorgan Chase & Co.
Wells Fargo has long been the envy of its rival for its ability to sell multiple products to its existing customers. However due to the scandal, the company had to pay $185 million in fines and $5 million to customers last week after reaching a settlement with three regulators over the alleged sales abuses.
Reuters said that during a CNBC appearance on Tuesday evening, Chief Executive John Stumpf apologized and said management takes responsibility for the problems identified in the settlement. Although the bank has eliminated sales goals for retail staff, Stumpf said "cross-selling" products from various businesses to customers is still important to growing its business.
"We still love-cross selling," he said, later adding, "Cross-sell is shorthand for deep, long-term relationships. We love that."
Even after firing more than 2 percent of its staff for improper selling, Wells Fargo is still examining its practices, Chief Financial Officer John Shrewsberry said earlier in the day.
The bank will "take a big wide fresh look at who knew what and when and what else might have been done," he said speaking at an industry conference. Shrewsberry said the review would impact people "at all levels of the organization."
