Published: Mon, September 26, 2016
Economy | By Melissa Porter

Wells Fargo CEO calls bank's conduct "unacceptable" in note to customers

Wells Fargo will eliminate the sales goals by January 1, according to a statement.

The bank last week agreed to pay a $185 million fine and refund $5 million in fees wrongly charged to customers.

Wells Fargo pledged Tuesday to eliminate product sales goals in retail banking as it works to win back trust following a crackdown last week by a federal consumer watchdog. "We have asked, the ranking member and I, that this committee investigate this".

The bank is "working to significantly strengthen our training, monitoring, oversight and compensation structure, which led to a reduction in this behavior", Wells Fargo spokeswoman Richele Messick said in an email.

Wells Fargo declined 0.4 percent to $48.54 Monday in NY, the worst performance in the 24-company KBW Bank Index. WFC shares are down more than 11% year-to-date, making it one of the poorer-performing financial stocks.

It is also less than the more than $200 million that the stock in the company held by company's chief executive, John G. Stumpf is worth. Performance and incentive adjustments will made by the end of the month.

But the company's shares have lost around 7 percent of their value since last week, when US regulators unveiled the fines against the bank, and it has ceded its position as the largest USA bank by market capitalization to rival JPMorgan Chase & Co.

Prosecutors are also focusing on whether there was willful blindness to sales practices on the part of executives at the bank, these people said. The damning CFPB report could directly impact its credit rating, for example.

USA bank Wells Fargo has lost its title as the largest banking institution in the world by market capitalisation, after billions of dollars were wiped off the company's value following its fake account fiasco. Wells Fargo even had a name for this objective, calling it the "Gr-eight initiative". District managers discussed daily sales for each branch and employee "four times a day, at 11 am, 1 pm, 3 pm and 5 pm", the lawsuit said.

Stumpf said clawback decisions are determined by the board of directors, and that product sales goals are not a component of compensation for any senior executives. Moody's has an A2 rating on the bank's long-term debt with a stable outlook.

Wells Fargo fell 0.9 percent to close at $46.52 in NY, erasing earlier gains.

The CFPB said Cordray has not been invited to testify.

The scandal has amounted to the biggest criticism of Stumpf since he became Wells Fargo's CEO in 2007.

"Those issues should have been caught sooner and dealt with more forcefully", Mike Mayo, an analyst at CLSA Ltd., wrote Monday in a client note obtained by Bloomberg. In 2014, Wells Fargo specifically cited "strong cross-sell ratios" as a factor behind Tolstedt's multi-million dollar pay.

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