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Wells Fargo is facing new restrictions on its business after regulators cut the US bank’s community lending standard rating to its lowest level since 1994 in the wake of its sham account crisis.
The Office of the Comptroller of the Currency deemed that Wells was a bank that “needs to improve” under the Community Reinvestment Act (CRA), a two-notch downgrade from its cherished “outstanding” rating.
As a result, officials are set to impose restrictions on Wells, which could lead to delays in branch openings and limits on acquisitions of non-bank companies.
Wells said it had been downgraded because of the accounts scandal that erupted six months ago, even though it had been ranked “outstanding” in the main parts of the regulator’s CRA test.
Thousands of Wells branch staff opened fake bank accounts and credit cards, in some cases forging signatures and providing bogus contact details, over about five years. Customers were charged fees for accounts about which they knew nothing.
“We are disappointed with this rating,” said Tim Sloan, the bank’s chief executive. “However, we are committed to addressing the OCC’s concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority.”
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