SAN FRANCISCO— More than four years after the Wells Fargo fake-accounts scandal was discovered, the bank reported Friday another $321 million in quarterly losses related to the customer refunds. That brings Wells Fargo's 2020 total for what it calls customer "remediation" to a staggering $2.2 billion, reported CNN Business.
“Wells Fargo did not specify which of its many scandals were responsible for the latest refunds, which bank executives had previously suggested were in the rearview mirror,” CNN Business reported. “Instead, the bank said the money is ‘primarily for a variety of historical matters.’ That could include anything from the millions of fake accounts Wells Fargo admitted to opening, to forcing customers to pay for unneeded auto insurance or charging unnecessary mortgage fees.”
Charlie Scharf, Wells Fargo's fourth CEO since the fall of 2016, acknowledged the toll on the bank's bottom line.
Profit Reported
Wells Fargo continues to issue statements that its scandals are behind it. In July 2020, John Shrewsberry, its former CFO, said the “worst” was over in terms of customer refunds. Then in Q3, the bank paid another $961 million in remediation. In October 2020, Shrewsberry acknowledged he had been wrong, but said the bank believed it had now “fully accounted for what it takes to close these things out.”
But as CNN Business noted, it continues to report losses related to the payouts.
Nevertheless, despite the legal woes, Wells Fargo reported it grew its fourth-quarter profit by 5% to $3 billion, in part because in the prior year period it had set aside $1.5 billion for litigation expenses linked to the scandals. It did, however, report at 10% slide in revenue to $17.9 billion and a decline in lending.
Expansion of Investment Bank
Separately, Wells Fargo is aiming to expand its investment bank in the coming years.
It’s part of a strategy Scharf has been developing since taking over the troubled consumer and commercial banking giant 14 months ago, Bloomberg reported.
“The push would take the fourth-largest U.S. bank a step closer to emulating some of its biggest rivals. Inside Wells Fargo, managers say they intend to build a more commensurate presence on Wall Street by focusing on business lines and industries where it already has credibility,” Bloomberg said.
That would translate, for example, to providing more underwriting and merger advice to corporate clients, but also lending to hedge funds looking to ramp up bets, Bloomberg added.