Wells Fargo is closing in on a settlement over its sales practices that could be announced as early as Friday, a person familiar with the situation told the FT.
The bank, the US’s fourth-largest by assets, has been fighting its way back from scandal since 2016, when it emerged that aggressive sales targets led employees to open millions of accounts without customers’ knowledge.
An imminent $3bn settlement with the Department of Justice and Securities and Exchange Commission was first reported by the New York Times on Thursday. A person familiar with the situation confirmed the report was accurate.
The settlement will not have any impact on the bank’s profits since it is covered by the $3bn they set aside to deal with litigation in the second half of last year.
Wells Fargo, DOJ, and the SEC declined to comment.
The bank has changed chief executive twice since the scandal broke, most recently to former JPMorgan Chase retail boss Charlie Scharf, who vowed to clean up the bank’s legacy and focus on the future when he took over in October.
John Stumpf, who was chief executive when the fake accounts scandal emerged, last month agreed to pay a $17.5m civil fine over the scandal and was banned from any future role at a US bank.
Wells Fargo has previously been fined more than $1bn by the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for unfair sales practices in its mortgage lending and auto loans businesses, as well as fake account openings.
A settlement with the DoJ and SEC will mark a significant step forward for the bank, but there are other hurdles still to clear, including a cap on the size of Wells Fargo’s balance sheet.
Reputational damage and the legal provisions have weighed heavily on the bank’s earnings in recent years, and it has consistently underperformed peers JPMorgan Chase, Bank of America and Citigroup.
Additional reporting by Kadhim Shubber in Washington