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Wells Fargo surges after confirming 2016 OCC sales practices consent order has ended

Published 02/15/2024, 12:08 PM
Updated 02/15/2024, 01:55 PM
© Reuters.  Wells Fargo (WFC) shares jump after confirming 2016 OCC sales practices consent order has ended
(Updated - February 15, 2024 1:53 PM EST)

Wells Fargo (WFC) shares jumped 7% Thursday after the bank said the Office of the Comptroller of the Currency has ended a 2016 consent order linked to a fake accounts scandal.

The scandal previously caused years of regulatory and management turmoil for the bank. The order required it to overhaul how it offers and sells products and services to consumers.

In addition, it required Wells Fargo to take further steps to protect its customers and employees, the company said in a statement.

“I have repeatedly said that implementing a risk and control framework appropriate for a bank of our size and complexity is our top priority, and closing consent orders is an important sign of our progress," said Charlie Scharf, Wells Fargo’s CEO, who joined the company in 2019. "This is the sixth consent order that our regulators have terminated since 2019."

Scharf added that the company's risk and control work remains a top priority for the firm.

Reacting to the news, analysts at Citi, who have a Buy rating and $57 price target on the stock, noted that "this is not the consent order imposing the asset cap, but was cited by the Fed as part of the reason the asset cap was imposed."

"We don’t expect any material impact to EPS as a result of this termination," the analysts wrote. "We view this as a positive proof point as mgmt. has consistently discussed progress on risk and control work and WFC has now terminated 6 consent orders under CEO Charlie Scharf’s tenure."

Furthermore, the analysts said WFC now has 8 remaining consent orders outstanding. They added that the stock rise "seems a bit strong," and they think it is more indicative of investor positioning.

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