2018 asset cap has cost Wells Fargo $220B in market value

Dive Brief:

Wells Fargo has lost $220.1 billion in stock market value since the Federal Reserve imposed a $1.95 trillion asset cap on the bank in February 2018, according to Bloomberg data. By comparison, Bank of America has lost $143.6 billion since then; JPMorgan Chase has lost $134.5 billion; and Citi has lost $116.8 billion.
The bank’s market capitalization since February 2018 has fallen to $96 billion as of Friday, Bloomberg reported.
The Fed temporarily lifted Wells' asset cap last month to allow the bank to provide more small-business loans under the Paycheck Protection Program (PPP). However, the bank has given no timeline by which its expects the lift to be permanent. Wells Fargo CEO Charlie Scharf said in January the bank may take "much of this year" to conduct reviews of the budget and broader business.

Dive Insight:

Wells Fargo's biggest competitors have seen a swell in deposits as the coronavirus crisis has taken hold, with customers fleeing smaller banks for more stable systemically important financial institutions. But Wells’ deposit bump was much smaller in the first quarter, by comparison. The San Francisco-based lender saw its assets increase by $53.8 billion in the first quarter, while JPMorgan Chase’s assets jumped by $452.1 billion; Citi's, by $268.6 billion; and Bank of America’s, by $185.9 billion, according to Bloomberg data.

Shares of Wells Fargo hit a 10-year low last week, spurring analysts to raise concerns the bank may have to reduce its dividend this year. Wells had offered the highest dividend among big U.S. banks over the past 12 months.

The mere idea of banks paying dividends during the pandemic has drawn heat in some circles. Former FDIC chief Sheila Bair said she thinks the Federal Reserve has erred by allowing bank payouts to continue.

The central bank imposed its asset cap on Wells Fargo in response to a 2016 fake-accounts scandal that has cost the bank billions of dollars in penalties. Regulators have since banned former Wells Fargo CEO John Stumpf from the banking industry.