Wells Fargo & Co established itself as one of America's biggest banks by erring on the side of caution rather than reckless expansion. Or so it seemed until a series of scandalous revelations starting in late 2016 revealed that at least part of its impressive growth had been assisted by sharp sales practises and false accounting. Sales staff were in effect encouraged by tough targets and an aggressive incentive scheme to cheat the system in order to to earn substantial bonuses, or otherwise risk dismissal. The business was created over the course of two decades from a series of careful acquisitions, not least the purchase in 1998 of the original Wells Fargo company by what was then Norwest Corp. However the defining deal to-date came at the end of 2008. Seizing the opportunities provided by the general meltdown in the financial services industry, Wells Fargo snapped up failing competitor Wachovia, doubling in size to become one of the country's two biggest retail banks, even overtaking rival Bank of America in several areas. It is now America's single biggest financial services company by outlets, with a vast network of 8,600 retail "stores" spread across 39 US states; also the biggest mortgage lender, having overtaken BofA in 2011; and was until late 2016 the world's most valuable bank by market capitalisation.
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Adbrands Daily Update 29th Mar 2019: Months of continuing criticism from regulators and lawmakers over Wells Fargo's apparent inability to comply with the ordered overhaul of corporate governance finally culminated with the abrupt resignation of CEO Tim Sloan. That came despite continuing support of the embattled leader from the board and major investors. "I'm confident in my ability to lead the work that needs to be done but it has become apparent that my presence has become a distraction," he said in conference call with analysts this week. The bank's general counsel Allen Parker will take over on an interim basis until an outside executive can be appointed.
Adbrands Daily Update 29th Dec 2018: Wells Fargo agreed a settlement with local regulators to cover improper sales practices in its retail bank, including the fake accounts scandal that was uncovered in Sept 2016 and excessive auto-loan and mortgage charges which came to light after that date. A total of $575m will be split between in 50 US states and DC, bringing total fines and charges relating to these issues over the past two years to more than $2bn. Another $2.1bn was paid this year to the Dept of Justice for selling toxic mortgage-backed securities in the months leading up to the 2008 financial crisis.
Adbrands Weekly Update 18th Oct 2018: All the big US banks did well in 3Q, even Wells Fargo which has spent the past couple of years struggling to bounce back from various misselling scandals. Trump's tax cuts were the major contributing factor to strong profit growth across the board. As usual, JP Morgan Chase led the field with a 24% jump in net profit to $8.4bn on revenues up 5% to $27.8bn. Strength in the consumer banking business offset weakness in investment trading. Bank of America reported a 32% jump in profits to $7.2bn on revenues of $22.8bn. Wells Fargo reported a similar leap, its best performance for several quarters, with profits also up 32% to $6.0bn on revenues of $21.9bn, up modestly on the year ago period. At Citigroup revenues dipped slightly to $18.4bn, but profit rose 12% to $4.6bn. Morgan Stanley and Goldman Sachs also performed strongly. Morgan delivered revenues of $9.9bn and profit of $2.1bn; Goldman had revenues of $8.7bn and profit of $2.5bn.
Adbrands Weekly Update 6th Sep 2018: There seems to be no end to the negative headlines swirling around leading US bank Wells Fargo. The group is still struggling to resurrect its reputation in the wake of multiple misselling revelations. However, far from drawing a line under its problems, the bank's internal investigations keep uncovering new problems. In the latest development, more than a dozen employees in its investment banking division were dismissed, and others are under investigation, for violations of the company's expenses policy with regard to out-of-hours dinners. The bank allows staff to charge meals to expenses if they are working late in the office. However, according to reports, a number of even senior employees had been regularly doctoring the time stamps on meals ordered within office hours - which are not chargeable - to make them eligible for reimbursement. Separately, the Wall Street Journal reported on "simmering discontent" among the small group of female senior managers in the bank's wealth management division over alleged gender bias: "Women should be at home taking care of their children, some of the executives said they had been told over the years by Jay Welker, president of Wells Fargo’s private bank and head of the wealth-management division since 2003. Qualified women had recently been turned down for several top roles that went to male applicants. When the women raised concerns, they felt ignored."
Adbrands Weekly Update 19th Jul 2018: US banks kicked off the reporting season with generally strong results. JP Morgan Chase led the charge as usual, with revenues up 6% to $27.7bn, while net income jumped 18% to $8.3bn, helped by higher interest rates and loan growth (and also of course a lower tax charge). "We see good economic growth, particularly in the US, where consumer and business sentiment is high," said CEO Jamie Dimon. Corporate and investment banking were particularly strong, offsetting declines in mortgages and credit cards. Bank of America took a slight hit on revenues, down very slightly to $22.6bn year-on-year because of a one-off gain in the prior period. Stripping out that exceptional item, comparable revenues were up 3% and net profits soared by 33% to $6.8bn. Citi's results were a little more muted, though revenues rose 2% to $18.5bn. In Citi's case, consumer banking generally fared better than investment banking, though the group's treasury and custody services were the strongest performer overall. Net profit jumped 15% to $4.5bn on the lower tax charge. Wells Fargo is still struggling under the cloud of its customer mistreatment scandals, with revenues down 3% to $21.6bn and an 11% fall in net profit to $5.2bn, despite the lower tax rate. The company said rising interest rates are putting homebuyers off new mortgages. There was much better news from Goldman Sachs, where profits soared 40% to $2.6bn on revenues up 19% to $9.4bn. Goldman also confirmed that Lloyds Blankfein will step down as CEO later this year, and will be succeeded by current president David Solomon. Morgan Stanley also reported a big jump of 39% in profits to $2.4bn - its second highest figure ever after 1Q 2018 - on revenues up 12% to $10.6bn.
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Free for all users | see full profile for current activities: Like most of its competitors the current Wells Fargo has been assembled through merger or acquisition of a string of other groups. The original business was established in California in 1852 by Henry Wells and William Fargo, then the principals of New York's American Express Company. The board of that company considered the Wild West too risky to allow a branch of American Express there, so Wells and Fargo established it as a separate business of their own. The most important commodity carried by the delivery service was gold, and as a result the company soon began to offer commercial banking to its customers. The delivery business was officially spun off in 1905.
For the next 70 years or so, Wells Fargo was primarily a city bank for San Francisco, but expanded its network to cover all of California by the end of the 1980s through the acquisition of rival Crocker and the local branches of the UK's Barclays. In 1996 it acquired First Interstate Bancorp, a multi-regional banking network first created by the founder of Bank of America in the 1920s. Two years later, Wells Fargo was itself acquired by Norwest Corporation, originally a cooperative of regional banks from Minnesota and the North West United States. The merged business retained the more celebrated Wells Fargo brand and image. The group's network expanded still further in 2000 with the acquisition of First Security, another multi-state banking group based in Utah and various South Western states.
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