Wells Fargo’s New Enforcement Action Pushes Back The Asset Cap Lifting Timeline (Rating Downgrade)

Summary:

  • Wells Fargo’s ongoing regulatory issues, including a recent OCC enforcement action, delay the likelihood of the Federal Reserve lifting its $1.95 trillion asset cap.
  • The bank’s efforts to modernize risk management systems have not fully satisfied regulators, impacting its ability to expand and improve profitability.
  • Wells Fargo’s valuation remains lower than peers due to regulatory scrutiny, with recent developments lowering near-term price estimates to the high $50s.
  • Future dividend increases and profitability are tied to lifting the asset cap, which now seems less likely to occur before late 2025 at the soonest, and probably later.

Wells Fargo Bank Branch in San Francisco.

Takako Phillips/iStock Editorial via Getty Images

Wells Fargo (NYSE:WFC) issues with federal regulators have and continue to frustrate shareholders. While it had recently appeared as though WFC was getting into the better graces of the agencies, this appearance changed earlier


Analyst’s Disclosure: I/we have a beneficial long position in the shares of WFC, JPM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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