Wells Fargo Commits to Satisfying Consent Order With Federal Reserve
February 02 2018 - 6:26PM
Business Wire
CEO Sloan cites efforts well underway to
enhance company’s compliance and operational risk management
program
Wells Fargo & Company (NYSE: WFC) announced it is confident
it will satisfy the requirements of the consent order it agreed to
today with the Board of Governors of the Federal Reserve System.
Under the consent order, the company will provide plans to the
Federal Reserve within 60 days that detail what already has been
done, and is planned, to further enhance the board’s governance
oversight, and the company’s compliance and operational risk
management. The order also provides for third-party reviews of such
plans and, until they are approved and implemented, limits on the
growth of the company’s total consolidated assets to the level as
of December 31, 2017.
This press release features multimedia. View
the full release here:
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“We take this order seriously and are focused on addressing all
of the Federal Reserve’s concerns,” said Timothy J. Sloan, Wells
Fargo’s president and chief executive officer. “It is
important to note that the consent order is not related to any new
matters, but to prior issues where we have already made significant
progress. We appreciate the Federal Reserve’s acknowledgment of our
actions to date. In addition, the order is not related to
Wells Fargo’s financial condition -- we remain in a strong
financial position and stand ready to serve the varied financial
needs of our customers.”
“Our board is committed to meeting the expectations of our
regulators and protecting and serving the interests of our
shareholders, customers, team members and the community,” said
Betsy Duke, independent chair of Wells Fargo’s Board of Directors
and a former member of the Board of Governors of the Federal
Reserve. “Every change we’ve made over the past year reflects this
and the valuable feedback of investors and stakeholders. Moving
forward, we’ll continue to be focused on maintaining an appropriate
mix of professional experiences and diverse perspectives necessary
to govern a franchise as important as Wells Fargo.”
The Federal Reserve’s consent order – which recognizes that the
company already has implemented improvements in its governance and
risk management – includes the following requirements:
- Within 60 days:
- The company’s board will submit a plan
to further enhance the board’s effectiveness in carrying out its
oversight and governance of the company.
- The company will submit a plan to
further improve the company’s firm-wide compliance and operational
risk management program.
- After Federal Reserve approval, the
company will engage independent third parties to conduct a review
to be completed no later than September 30, 2018 to confirm
adoption and implementation of the plans.
- The asset limitation will remain in
effect until third-party reviews have been completed to the
satisfaction of the Federal Reserve.
- After removal of the limits on asset
growth, a second third-party review will be conducted to assess the
efficacy and sustainability of the risk management
improvements.
“While there is still more work to do, we have made significant
improvements over the past year to our governance and risk
management that address concerns highlighted in this consent
order,” Sloan said.
These actions have included:
Board governance:
- Separating the roles of chairman and
CEO and amending the company’s by-laws to require an independent
chair.
- Electing six new independent directors
in 2017 as five directors retired, bringing to eight the total
number of directors elected since 2015, and planned refreshment of
an additional four directors in 2018, with the retirement of three
of those directors occurring by the time of our 2018 Annual Meeting
of Shareholders.
- Enhancing the overall capabilities and
experience represented on the board, including financial services,
risk management, cyber, technology, regulatory, human capital
management, finance, accounting, and consumer and social
responsibility.
- Reviewing the board’s committee
structure and leadership, amending committee charters to enhance
risk oversight, and refreshing the chairs of certain key
committees, including the Risk Committee and Governance and
Nominating Committee.
- Conducting a board self-evaluation in
2017 facilitated by Mary Jo White, a senior partner at Debevoise
& Plimpton LLP and former chair of the Securities and Exchange
Commission. The self-evaluation informed the board’s changes in its
structure, composition and governance practices.
Risk management:
- Centralizing critical control functions
(including Human Resources, Finance, and Technology) to improve
enterprise visibility, consistency and control.
- Centralizing all risk management
functions to accelerate the design and implementation of a fully
integrated operating model for risk management.
- Developing and executing comprehensive
plans that addressed our compliance and operational risk management
programs, organizations, processes, technology and controls.
- Hiring external talent for critical
risk management leadership roles – chief operational risk officer,
chief compliance officer and head of regulatory relations (newly
created).
- Forming new centralized enterprise
functions dedicated to key risk control areas, including the
Conduct Management Office (January 2017), Enterprise Data
Management function (September 2017) and Comprehensive Customer
Remediation Group (November 2017).
Conference Call
The company will host a live conference call on February 2,
2018, at 4:30 p.m. PT (7:30 p.m. ET) to discuss the consent order.
The live audio webcast will be available at the following address:
https://engage.vevent.com/rt/wells_fargo_ao~9499813.
You also may participate by dialing 855-604-1135 (U.S. and
Canada) or 574-990-3591 (International).
Please find below a link to an investor deck for the call.
A replay of the conference call will be available beginning at
7:30 p.m. PT (10:30 p.m. ET) on Friday, February 2, 2018, through
Friday, February 16. Please dial 800-585-8367 (U.S. and Canada) or
404-537-3406 (International) and enter Conference ID #9499813. The
replay will also be available online at
https://www.wellsfargo.com/about/investor-relations/events/ and
https://engage.vevent.com/rt/wells_fargo_ao~9499813.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $2 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investments, mortgage, and consumer and commercial finance through
more than 8,300 locations, 13,000 ATMs, the internet
(wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 263,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations.
Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements about our
future financial performance and business. Because forward-looking
statements are based on our current expectations and assumptions
regarding the future, they are subject to inherent risks and
uncertainties. Do not unduly rely on forward-looking statements as
actual results could differ materially from expectations.
Forward-looking statements speak only as of the date made, and we
do not undertake to update them to reflect changes or events that
occur after that date. For information about factors that could
cause actual results to differ materially from our expectations,
refer to our reports filed with the Securities and Exchange
Commission, including the “Forward-Looking Statements” discussion
in Wells Fargo’s most recent Quarterly Report on Form 10-Q as well
as to Wells Fargo’s other reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors”
in our Annual Report on Form 10-K for the year ended December 31,
2016, available on its website at www.sec.gov.
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version on businesswire.com: http://www.businesswire.com/news/home/20180202005711/en/
MediaArati Randolph, 704-383-6996Corporate
Communicationsarati.randolph1@wellsfargo.com@AratiRandolphWForMark
Folk, 704-383-7088Corporate
Communicationsmark.folk@wellsfargo.com@MarkFolkWForInvestorsJohn
Campbell, 415-396-0523Investor
Relationsjohn.m.campbell@wellsfargo.com
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