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Ohio latest to bar Wells Fargo from state business

Published 10/14/2016, 03:20 PM
© Reuters. A Wells Fargo Bank is shown in Charlotte, North Carolina
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NEW YORK (Reuters) - The state of Ohio on Friday joined a growing list of municipalities to suspend business relationships with Wells Fargo (NYSE:WFC) & Co over a scandal involving as many as two million bogus accounts.

Governor John Kasich announced that for one year he is barring Wells Fargo "participating in future state debt offerings and financial services contracts initiated by state agencies under his authority," and will seek to exclude the California-based bank from participating in debt offerings initiated by the Ohio Public Facilities Commission.

"While Wells Fargo only does limited retail banking in Ohio, it does regularly seek state bond business so I have instructed my Administration to seek services from other banks instead, and I’ll cast my votes against Wells Fargo on the Public Facilities Commission," Kasich said in a statement.

"This company has lost the right to do business with the State of Ohio because its actions have cost it the public’s confidence," he added.

Last month, the bank agreed to pay a $190 million settlement over its staff opening as many as 2 million accounts without customers' knowledge. The misconduct, carried out by low-level branch staff to meet internal sales targets, shattered the bank's folksy image and triggered a raft of federal and state investigations.

The scandal cost former chief executive and chairman, John Stumpf, his job when he was forced to resign on Wednesday after 34 years with the bank.

Ohio joins other states and local municipalities, including California, Illinois, and Chicago in banning Wells Fargo from participating in bidding for bond underwriting and other types of business.

In addition to outright sanctions, the states of Massachusetts and Oregon, as well as the city of New York, have said they would press for reforms at the bank, await results of investigations while also reviewing their business relationship with the company.

© Reuters. A Wells Fargo Bank is shown in Charlotte, North Carolina

Kasich did say he could possibly revisit the decision in the coming year if Wells Fargo were to "make progress in restoring a culture of integrity."

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