In the middle of an ongoing settlement over the scandal involving millions of fake accounts being made without customer consent, Wells Fargo & Co has recently announced that it is considering removing some of its businesses. This will allow the company to focus more on their strengths.
The company recently received a preliminary agreement to settle the class action suit involving the phony account scandal by $142 million, an amount which was called by a San Francisco federal judge as a fair, reasonable, and adequate settlement. Wells Fargo chief executive officer Tim Sloan commented on the court’s ruling saying that the company is pleased with the decision and that the approval marks a major milestone in Wells Fargo’s efforts regarding the settlement of the scandal with both their customers and regulators.
Wells Fargo is now planning on cutting more businesses as a part of their growing efforts in restoring the confidence of their investors after receiving numerous class action suits last year at the wake of the scandal which seriously tainted the bank’s image.
The bank which currently has over $1 trillion worth of assets will now be reevaluating its business model. Wells Fargo admitted last year that it has imposed impossibly high sales quotas on its employees that lead to millions of fake accounts being made using existing customer information without their authorization.
Wells Fargo will now be focusing on their products and services which are most accessed by the customers and the ones which give their shareholders the highest returns.
Wells Fargo has been working on cutting down a number of its business arms in the past month. Just recently it has reached an agreement to sell the Wells Fargo share registration arm to Equiniti which is based in London for around $227 million. It also reached a deal to sell its commercial insurance business for an unspecified amount.
Last week, the company reported its second quarter earnings report that missed most analyst estimates. The bank which happens to be the third-largest bank in the United States based on assets delivered a revenue of $22.17 billion versus most analysts estimates of $22.47 billion. Despite this, the company’s second quarter earnings were relatively higher compared to most analyst estimates. For the second quarter, Wells Fargo had an earnings of $1.07 per share compared to initial expectations of $1.01 per share. The company’s total profits stood at $5.91 billion or 4.5% higher from the same quarter last year. However, Wells Fargo shares slipped by 1% after the weak revenue. q