Investors hopeful Wells Fargo asset cap will be removed in 2025

Nupur Anand

Wed, Mar 19, 2025, 3:04 AM 3 min read

By Nupur Anand

NEW YORK (Reuters) -Investors and analysts are much hopeful the plus headdress connected Wells Fargo volition beryllium lifted this twelvemonth aft the slope managed to adjacent 5 regulatory actions successful 2025, making its shares much attractive.

Since January, the slope has closed 2 consent orders by the Federal Reserve, 2 by the Office of the Comptroller of Currency and 1 by the Consumer Finance Protection Bureau.

It has 3 remaining consent orders -- an enforcement enactment involving a good oregon circumstantial directive to code an contented by the regulators.

Investors accidental this shows advancement toward fixing firm governance issues and an quality to enactment with regulators.

"The closing of 5 consent orders successful conscionable a mates of months shows that the institution is connected the close way and the timeline of ending different regulatory punishments including plus headdress has accelerated," said Dave Ellison, a portfolio manager astatine Hennessy Funds, which holds Wells Fargo shares.

Wells Fargo is operating nether an plus headdress mandated by the Federal Reserve successful 2018, preventing it from increasing until regulators deem it has fixed problems dating backmost to the 2016 fake-accounts scandal.

It is 1 of the toughest punishments U.S. regulators tin enactment successful place, and its removal requires a ballot by the Fed's committee of governors. Wells Fargo declined to comment.

But resolving aggregate consent decrees has fueled expectations that the plus headdress could beryllium lifted successful 2025, with immoderate suggesting it could beryllium successful the archetypal fractional of this year.

"While we don't presently ain immoderate Wells Fargo banal successful our portfolio, the caller developments astatine the slope person been precise affirmative and we could look astatine adding the banal arsenic things are looking affirmative for them," said Walter Todd, main concern serviceman astatine Greenwood Capital Associates, which manages $1.7 cardinal successful assets, including immoderate different slope stocks.

Fixing compliance problems has been the apical precedence for the slope nether CEO Charlie Scharf, who took implicit the helm successful 2019. Since then, the slope has closed 11 consent orders.

"Once the plus headdress is lifted, the bank's net could besides amended and tin turn faster than immoderate of its peers, coating a affirmative representation for the bank," said Brian Mulberry, portfolio manager astatine Zacks Investment Management, who holds the bank's stock.

Despite caller marketplace volatility, Mulberry expects Wells Fargo's banal to interaction $80 successful the mean term. On Tuesday, it closed astatine $71.11. Among its ample slope peers, it is the lone banal that is successful affirmative territory this twelvemonth astatine a clip erstwhile others person slumped.