Last week, Wells Fargo shares dipped by as much as 2.6% in response to the report that the company has charged over 800,000 of their customers for automobile or car insurances excessively.
The report which stated that thousands of the bank’s clients were overcharged with car insurances that will cost the bank $80 million worth of damages until the real numbers of the case have been determined. Analysts have determined that the company might still face considerably higher charges that will affect the bank’s shares in the coming weeks.
Wells Fargo is currently one of the biggest banks in the country that is also known for being a huge automobile loan company with their network stretching to more than 14,000 dealers. While the company did not comment on the lawsuits being filed against them at the moment, they have released a statement regarding the affected customers.”We are very sorry for the inconvenience this caused impacted customers and we are in the process of notifying them and making things right,” said the bank in a statement.
In the wake of these reports, the bank has announced that it will lay off around 70 of their senior executives in their efforts to cut down its current management team as a part of their restructuring plans. According to Wells Fargo, the company could have removed more executives but due to the performance of some in interviews and sales quality, some has been able to keep their positions.
After the completion of the restructuring plan, the investment and banking company will be having a total of twelve regional executives.
This comes less than a week after the company has reportedly reached an initial agreement to settle its fake account scandal by $142 million, an amount which was deemed by a San Francisco judge to be fair and reasonable as well as an adequate settlement. The company has also announced its plans just two weeks ago that it will be cutting a huge chunk of its businesses which will allow them to focus more on their strengths without being weighed down by investments with lower returns.
Wells Fargo which currently holds around $1 trillion of assets is currently planning to revamp its business model following the wake of the scandal last year that has cost the company million dollars worth of fines and class action suits from regulators.
During the company’s second quarter earnings report, the delivered earnings of $1.07 per share versus EPS expectations of $1.01 with their revenue coming in at $22.5 billion. Wells Fargo shares have also performed in a downward direction this year.