Wells Fargo account openings slow in October after scandal
By Dan Freed and Richa Naidu
(Reuters) - Wells Fargo & Co's (WFC.N: Quote) account openings slowed in October following a sales scandal that shattered the bank's folksy image, triggered federal and state investigations, and cost the bank's chief executive his job.
October consumer account openings slumped 27 percent from September and were down 44 percent from a year earlier, Wells Fargo said on Thursday. New credit card applications fell 35 percent from November and 50 percent from a year ago.
"Because the sales practices settlement was announced on Sept. 8, October data reflects the first full month of impact," Mary Mack, head of Wells Fargo's community banking business, said in a statement.
On a conference call with analysts, Mack said the decline in new account openings had stabilized but would remain at a lower level throughout the remainder of the year.
The bank agreed in September to pay regulators $185 million to settle charges that its staff opened as many as 2 million accounts without customers' knowledge. Reuters reported in October that thousands of small business customers were also affected by the misconduct.
The revenue impact from the decline in new account openings will be small, Chief Financial Officer John Shrewsberry said on the call.
He estimated that if new credit card applications stay at the same level through the rest of the fourth quarter, it might shave $20-25 million off 2017 revenue estimated by analysts to be more than $91 billion.
Shrewsberry said it was too early to estimate the expense impact, which will include litigation and increased costs for compliance and risk management. Continued...