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TheEconomistOctober 26th 2019 63

1

W

ells fargo has reinvented itself be-

fore. In a vault beneath the bank’s

headquarters in San Francisco is an archive

of papers and objects from the 1860s, when

the company’s stagecoaches criss-crossed

America delivering packages. Advertising

posters tout the security of their wagons,

thanks to the sharp-shooting skills of the

marksmen that accompanied them. As first

the railroads, then the telegram and later a

government-run delivery service threat-

ened the survival of the firm its bosses

adapted, using customers’ trust in their

brand to expand their banking business.

Charlie Scharf, who took over as the

bank’s chief executive on October 21st,

must transform Wells once again. He

comes from bny Mellon, a smaller bank

based in New York. It is rare for a giant

lender to pick an outsider to run it. The

bosses of America’s other largest banks—

JPMorgan Chase, Bank of America, Citi-

group, Morgan Stanley and Goldman

Sachs—are seasoned insiders.

But these are unusual times for Wells.

The bank has spent three years trying to

cleanse itself of scandal. In 2016 it was re-

vealed that millions of spoof accounts had

been opened by more than 5,000 employ-

ees. Further infractions involving home

and auto loans have since come to light.

Regulators have slapped penalties on the

bank, the most onerous of which was cap-

ping its assets at $1.95trn, their level in

2017. Perry Pelos, Wells’s head of commer-
      cial banking, says the cap has not crimped
      growth so far because the bank has scaled
      back unprofitable lines of business. But, he
      admits, it will eventually begin to bite.
      Mr Scharf has much to do. Investors say
      working with regulators to lift the consent
      order is their priority. But the harder task is
      working out what comes after that.
      In 2016 America’s largest banks could
      mostly be split into two groups. The full-
      service banks—Bank of America (boa),
      JPMorgan and Citigroup—did everything,
      from underwriting initial public offerings
      to lending to corporate and retail clients.
      The specialists, Goldman Sachs and Mor-
      gan Stanley, offered investment banking
      and wealth- or asset-management ser-
      vices. Wells, with its giant retail bank and
      limited exposure to risky investment bank-
      ing, was the odd one out. That helped it sail
      through the financial crisis and become
      the world’s most valuable bank.
      But Wells has been firefighting since.
      Meanwhile JPMorgan, its biggest rival, has
      bounded ahead. Its balance-sheet has
      grown by nearly 10% since the end of 2017
      (see chart 1), while Wells has gone nowhere.
      As big banks are barred by regulators from
      acquiring smaller ones, growth has been
      organic. JPMorgan expanded its branch
      network, gaining market share in places
      that Wells has traditionally dominated,

Wells Fargo

A journey of self-discovery

SAN FRANCISCO

America’s banks are adopting new personalities: Goldman is wooing consumers,

JPMorgan Chase is loading up on branches. Who does Wells Fargo want to be?

Off the wagon

Q42017-Q32019,%change

Sources:Bloomberg;companyreports

Revenue Assets

20151050-5

Wells Fargo

Citigroup

Bank of

America

JPMorgan

Chase

1

Finance & economics

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67 GermanyandtheECB

67 Tradefinance’sepicpapertrail

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