Wells Fargo Lost ‘Tens of Millions’ in Municipal and State Deals After Scandal

Wells Fargo & Co. is no longer releasing the customer account figures it started disclosing after a scandal in September erupted over employees creating fake accounts to reach sales goals.

Wells Fargo had been reporting 19 measures of client activity monthly, including the number of retail bank customers opening and closing checking accounts or applying for credit cards. Just a handful of those figures were released Friday when the San Francisco-based lender reported quarterly results, and most didn’t compare with previous examples.

One reason for the change is that the new head of retail banking, Mary Mack, is seeking to shift employees’ focus by releasing figures more closely aligned with customer satisfaction goals, Chief Financial Officer John Shrewsberry said Friday in a telephone interview.

“It’s hard for her to tell her employees that it’s not important if the firm is telling people outside that it’s worthy of focus,” Shrewsberry said. “That sends the message to employees that more is better, and that the firm wants more, and that’s not what we’re trying to do.”

The bank began offering monthly updates on the retail bank soon after regulators fined Wells Fargo $185 million in September for creating an aggressive “cross-selling” culture that encouraged employees to open fake accounts. The purpose was to offer greater “transparency” into the firm’s workings, Chief Executive Officer Tim Sloan has said.

‘Be Transparent’

Shannon Stemm, an analyst at Edward Jones & Co., said the older figures showed the scandal “certainly stopped a lot of new customer interest” in Wells Fargo. She said executives “didn’t have much of a choice but to come out and be transparent about that early on.”

Analysts including Atlantic Equities’ Christopher Wheeler said the bank’s decision to discontinue the disclosures may face resistance.

“They are trying to put the whole thing behind them, stop having to discuss it,” Wheeler said in an email. “I suspect it may be short-sighted and Wells Fargo may publish it in the coming days as it gets kick-back” from investors.

Sloan said in May that Wells Fargo would begin quarterly releases as he thought the bank “was on the right path” to changing its culture. The quarterly figures track 10 measures including how often customers use branches and automated teller machines and how much they spend on credit cards.

“If you think about what was at the heart of the sales practice issue, it’s people focusing too much on opening up accounts,” Shrewsberry said. “That’s part of how they had gotten themselves in trouble.”


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