While many businesses reeled in the aftermath of the outbreak of the coronavirus disease, Wells Fargo took an exceptional nosedive as scandals rocked it.
American multinational financial services giant Wells Fargo & Co (NYSE: WFC) has announced the termination of a 2015 Consent Order it got served by the Office of the Comptroller of the Currency (OCC), an order served in connection to the company’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program.
According to the company, the termination of the consent order is a testament to its efforts to remedy the problems and its efforts to get back on good terms with Federal Regulators particularly the OCC.
“Building the right risk and control infrastructure and remediating our legacy issues remain our top priority, and the termination of this consent order is evidence of our progress,” said Chief Executive Officer Charlie Scharf in the released statement. “While we are pleased with this action, we have a significant amount of work ahead of us and are continuing to commit the necessary resources to this effort.”
Per the release, the consent order required the bank to implement customer due diligence standards that include a collection of current beneficial ownership information for certain business customers. Wells Fargo undertook significant work to remedy the deficiencies that gave rise to the consent order and to enhance its BSA/AML compliance program.
The shares of Wells Fargo are responding positively to the news as they closed Tuesday’s trading with a 2.79% gain to US$30.53. The shares also picked further momentum in the after-hours trading with an additional 2.33% surge at the time of writing.
Is This a Beginning of Greater Performance for Wells Fargo?
While many businesses reeled in the aftermath of the outbreak of the coronavirus disease, Wells Fargo took an exceptional nosedive as scandals rocked the third largest bank in the United States. While a growth rate of 18.4% was recorded by the S&P 500 Index (INDEXSP: .INX) in 2020, Wells Fargo made a showing as the worst performer in the financial sector according to a Yahoo Finance analysis, closing the year with a 43% dip in its share price.
The company has made significant efforts to repair its corporate image following issues related to sales scandal and plummeting revenue, and this effort is what translates to the termination of the 3-year old Consent Order by the OCC. While this Consent Order lifting comes as a welcome development for Wells Fargo in its attempts towards corporate rejuvenation, the company still has a long way to go to get back on track to its glory days.
According to the Yahoo Finance report, Wells Fargo still has a few more restrictions from Federal Regulators as pending when the firm is certified to have improved its control systems. However, the OCC has given the bank a big break and this year may arguably turn out better for the company in terms of share growth and revenue as a whole.
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