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Wells Fargo CEO Says Again the Bank is Open For Business After Fed Restrictions

14 Feb 2018 5:47 am

By Emily Glazer

Wells Fargo & Co. Chief Executive Timothy Sloan worked to reassure investors Tuesday that the Federal Reserve's unprecedented action capping its assets this month won't hurt the bank.

The move by the Fed, which also said the San Francisco lender would replace four directors, is unlikely to affect the bank's annual filing with the Fed for the "stress test," a review of the bank's financial health that has become an important post-crisis ritual for banks looking to approve larger stock dividends and share-buyback programs.

Speaking at an investor conference Tuesday, Mr. Sloan said the moves by the Fed and the bank's response are unlikely to affect its stress-test submission "positively or negatively." Wells Fargo's shares rose 0.9% in morning trading, the most among shares of large U.S. banks.

Mr. Sloan also said there "haven't been any major changes" to the bank since the Fed announced its unprecedented enforcement action on Feb. 2 and Wells Fargo gave some updates on a hastily arranged conference call.

"We have plans to address the Fed's concerns," said Mr. Sloan, adding that the bank "will meet the deadlines" the Fed has set. Investors are focusing on those deadlines to monitor when the bank can begin growing its assets more freely again.

Each morning, Mr. Sloan said he checks metrics like loan, liquidity and deposit updates.

"It's pointing to a slow but steady recover," he said. "It's never as fast as I would like, but it's absolutely occurring."

On the stress test, he said if assumptions are more conservative, the underlying credit quality shouldn't impact the bank's balance sheet. He added that he and CFO John Shrewsberry have been "very clear" that Wells Fargo's goal over the next 2-3 years is to get its capital levels down to about 10%, an amount that should provide cushion above the regulatory minimum.

"That's absolutely doable and at that's what our plan is, to include stage one of that in CCAR this year," he said. Still, banks are often concerned they may fail the so-called qualitative portion of CCAR that is harder to predict.

Mr. Sloan said the bank's asset cap has had a "nonexistent" customer impact. Mr. Sloan was responding to a question about customers, where he detailed the bank's focus on reiterating that it is open for business.

The Fed imposed an asset cap that Wells Fargo has said impacts its earnings by $300 million to $400 million. Mr. Sloan said there hasn't been any change in estimates so far.

"We wanted to provide as much clarity as possible, how we were thinking about operating within the asset cap," he said. "None of that has changed."

(END) Dow Jones Newswires

February 14, 2018 00:47 ET (05:47 GMT)

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