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Wells Fargo Essay

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FIN 9858, Term Paper – Wells Fargo

1.What was the financial performance of Wells Fargo during John Stumpf’s tenure as Chief Executive Officer (2007-2016)?

The financial performance of Wells Fargo during John Stumpf’s tenure as CEO can be described as exemplary: assets grew by 46% and net income grew by 85% and the bank’s efficiency ratio at 58.7% was lower than at all of Wells Fargo’s major competitors. The bank before the scandal become the most valuable in the world, with a market capitalization of $300 billion dollars. The bank’s stock price grew at a CAGR of 12.4% in the period outpacing all major competitors. In sum the bank’s performance during John Stumpf’s tenure at the bank prior to the scandal was exemplary, with first class performance …show more content…

Upon John Stumpf’s resignation all of this began to crumble as the stock declined 10% already between September 8th, 2016, and September 20th, 2016, as the pressure from customer and employee lawsuits and congressional investigations began to weigh on the stock. 2.What were the effects of the cross-sell strategy on Wells Fargo’s stakeholders?

Wells Fargo’s cross-sell strategy was a cornerstone of the firm’s business strategy and it had important, differing effects on different stakeholders. On shareholders the effect before the scandal was very positive, as Wells Fargo was known as the “King of Cross-Selling”. The bank had the highest cross-sell ratio among large banks, 5.95, which allowed the firm to produce exceptional profits in its Community Banking Division (59% of net income in …show more content…

In the case of Wells Fargo, the firm had all of these things “on paper”, but in practice the firm was not run in an ethical manner. For example, the firm had a “Recommended Process for Resolving an Ethical Dilemma” and a “Non-Retaliation Policy” for Whistleblowers. However, in reality Whistleblowers were fired using false pretenses such as “tardiness” and flagging managers or human resources for unethical behavior was either routinely ignored or led to an employee being fired. Management routinely touted “integrity” as a core corporate value but incentivized employees to ‘push’ financial products by tying compensation to sales quotas and by creating a culture where employees who missed their quotas were harassed, by being forced to attend calls on Saturday for example. In sum, the firm pretended to maintain an ethical corporate culture, but its culture in practice was the exact

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In the article Wells Fargo’s Reaction to Scandal Fails to Satisfy Angry Lawmakers it mentions how lower-level employees were mainly affected by this unethical behavior and that more than 5,300 employees had been fired due to the unethical practice. Some employees were fired that did not participate in the unethical practice during the scandal were affected as well as a result of not being able to attain the sale goals. Stated in the article, How The Wells Fargo Phony Account Scandal Sunk John Stumpf, “Two former employees filed a $2.6 billion class action suit, alleging branch workers were unfairly fired when they could not meet Wells' aggressive sales quotas.” Customers also suffered because they trusted this bank and its employees to do their job right and they were taken advantage of.

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These factors can have a significant impact on the bank’s performance and

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As a diversified, community-based financial services company, Wells Fargo provides a series of services, including banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations. Its total assets at the end of 2009 were only $1243 billion while in 2015 this data have risen to more than $1787 billion which is a significant growth. When it comes to the equity, the percentage is basically smooth and steady with only a slightly increase less than 2% in 2013 from 9.2% to 11.2%. And the Tier 1 ratio also goes up smoothly during these years and reaches 12.56% in 2015 from 9.25% in 2009. As to the impaired loans over equity ratio, it experiences a lasting decrease during 2009 to 2015 where is only 12.89% with

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Wells Fargo has taken extra time to invest in training to give skill-sets needed to push sales, and leadership workshops. I believe this is an excellent route to take, considering more companies are pouring more funding into these types of avenues to not only increase the productivity of its company, but to ensure things like this can be prevented in the future. I also think that Wells Fargo should go deeper than they already have, and work to establish a healthy company culture, such as with Google and Facebook, where everyone feels as if they have an input. With good company culture brings a good set of morals and ethics that can go further than just within the small confounds of Wells Fargo, but can also transfer into their own daily lives, which is great to

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Wells Fargo has been in business for over 160 years and was founded on March 18, 1852, by Henry Wells and William Fargo. The company opened its first office, in San Francisco, on July 1852. Wells Fargo served the West with banking needs, which included gold and paper bank drafts, and offered quick delivery of gold or other valuables. In1855, the first of many financial dilemmas took place when a drought made it impossible to mine for gold, and this caused almost 200 businesses in San Francisco to fail, but Wells Fargo didn’t fail, they prospered. In the early1860s, Wells Fargo acquired almost all the stage lines from the Missouri River to California, giving them a monopoly on transcontinental delivery services.

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According to Fortune, “Executives sought to drive growth by putting undue pressure on its employees to hit sales quotas, and many employees responded by fraudulently opening customer accounts. In most cases these accounts were closed before customers noticed, but in other cases consumers were hit with associated fees or took hits to their credit ratings. The bank was forced to return $2.6 million in ill-gotten fees and pay $186 million in fines to the government. But the biggest hit Wells Fargo will take is to its reputation, as the media and government officials spent much of the year slamming the bank for its fraud,” (Mathews). The victims being the unknowing customers who saw their credit ratings plummet and faced steep financial fees, that were brought about through no fault of their own.

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Introduction One thing that has aroused my curiosity when I saw the logo of Wells Fargo, it is the western movies image that many non-Americans associated with the U.S.A. this logo (stagecoach) for a bank is unusual and as ex-bank employee, I try to learn more in order to compare. What I learned arouse my wish to work upon my graduation and why not you? Its welcome, I quote “Regardless of our growing size, scope, and reach, we must never lose sight of putting our customers first and helping them succeed financially.” (Wells Fargo & Company) summarize my interest for this company. For a financial entity of this size, you must know the history of Wells Fargo, you must know values and culture of Wells Fargo, and you must know the strategy and goals of Wells Fargo.

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