Wells Fargo fails 'living will' test, faces restrictions: U.S. regulators
By Dan Freed and Patrick Rucker
NEW YORK/WASHINGTON (Reuters) - U.S. officials on Tuesday limited Wells Fargo & Co's (WFC.N: Quote) ability to grow its business, punishing the bank for not having a sufficient plan to protect markets in the case of bankruptcy.
The ruling crowns a dismal year for the San Francisco lender roiling from a scandal in which bank employees created as many as 2 million accounts without customer authorization.
Chief Executive Officer John Stumpf resigned in the wake of that controversy. Tuesday's ruling means the bank may not establish international bank entities or acquire non-bank subsidiaries, regulators said.
On Tuesday, regulators determined for a second time this year that the Wells Fargo "living will" fell short.
Wells Fargo is one of eight leading banks that must outline how they would be unwound in an orderly way in bankruptcy. Wells Fargo was one of five banks to fail an initial assessment in April. State Street Corp (STT.N: Quote), JPMorgan Chase & Co (JPM.N: Quote), Bank of New York Mellon [BKNYK.UL] and Bank of America Corp BAC.N passed on Tuesday.
Wells Fargo may submit an amended living will by March 31. The restrictions may then be lifted if the Federal Reserve and Federal Deposit Insurance Corporation allow.
"We believe we will be able to address the concerns raised today in the March 2017 revised submission," the bank said in a statement.