Wells Fargo (NYSE:WFC) has reportedly asked the Federal Reserve to remove the asset cap placed on the bank as a penalty for creating millions of fake bank accounts in 2016. Reuters first reported the news, citing an anonymous source.
The banking giant says that by removing the cap, which currently requires the bank to stay below $1.95 trillion in assets, it will be able to further assist customers and businesses impacted by the coronavirus pandemic.
The bank at the end of 2019 had about $1.93 trillion in total assets, not leaving too much room for growth before hitting the cap. So, in order to stay in compliance and take on new assets, the bank would have to restructure the balance sheet and let certain parts run off.
Although growth projections will likely slow in most business lines at most banks, there could be new opportunities. For instance, Congress is preparing to grant hundreds of billions in new spending authority to the U.S. Small Business Administration (SBA) in order to help struggling businesses. Wells Fargo is a top SBA lender.
Bank of America analyst Erika Najarian said Wells Fargo could also likely benefit from deposit growth as people move their money to safer institutions during this time of uncertainty, according to Banking Dive.
Wells Fargo spokeswoman Arati Randolph said the bank could not comment on regulatory matters, and the Federal Reserve, which previously said the cap would be in place until the bank improved its governance and risk controls, did not comment either.
Last month, Wells Fargo agreed to pay a $3 billion fine to the Department of Justice and the Securities and Exchange Commission as part of its settlement over the bank's fraudulent account scandal.