Customers avoid Wells Fargo after scandal over sales practices
20 February 2017
Customers continue to shun Wells Fargo after the scandal over its sales practices, with the number of new checking accounts down 31 per cent in January from a year earlier.
Applications for credit cards fell 47 per cent. Branch bankers had 14 per cent fewer interactions with customers.
Wells Fargo had been releasing monthly reports on these figures since the controversial sales practices emerged in a "report card" on how the bank had been dealing with the scandal.
Wells Fargo's "customer loyalty" scores, a metric the bank considered important enough to highlight each quarter, continued to be down several percentage points compared to before the scandal.
But there were signs of stabilisation as checking and credit cards applications and traffic were all down from a year earlier, even as they were up and stable compared to December.
The San Francisco-based bank public ire since it came to light that, in order to meet sales goals, employees opened bank and credit card accounts without customer authorisation.
Federal and California regulators fined the bank $185 million (Wells Fargo fined $185 mn for opening millions of unauthorised accounts). and both the head of Wells' consumer banking division Carrie Tolstedt and CEO John Stumpf were replaced (See: Fake accounts scandal forces Wells Fargo chief John Stumpf to step down) According to commentators, the boards of the firm were likely to decide to withhold 2016 bonuses from some top executives including chief executive officer Tim Sloan and chief financial officer John Shrewsberry in a bid to hold managers accountable for the retail bank's performance, Bloomberg reported citing a person with knowledge of the matter.
The figures for January ran counter to the trend of falling account closings during November and December. Customers closed 1 per cent more accounts in January than in December, and 4 per cent more than a year earlier, while the 47 per cent decline in credit-card applications last month was the worst since October, when applications dropped 50 per cent.