Are you wondering about the stability of Wells Fargo Bank? It's a question many people ponder, especially given the banking giant's history. Understanding a bank's stability is crucial for anyone considering where to put their hard-earned money, whether you're a new customer, a long-time account holder, or an investor. Let's delve into a comprehensive, step-by-step guide to assess Wells Fargo's stability, examining its current financial health, regulatory standing, and its journey of recovery.
How Stable Is Wells Fargo Bank? A Detailed Examination
The question of Wells Fargo's stability is complex, intertwining its past challenges with its current efforts and future outlook. While it's one of the "Big Four" U.S. banks and a systemically important financial institution, its history, particularly the "fake accounts" scandal, means it faces a higher degree of scrutiny. However, recent developments indicate significant progress.
Step 1: Understanding the Past – The Foundation of Current Perceptions
Before we dive into the present, it's essential to acknowledge Wells Fargo's tumultuous past. This isn't to dwell on negativity but to understand the context of its current efforts and regulatory oversight.
The "Fake Accounts" Scandal and Its Aftermath
The scandal, which came to light in 2016, revealed that Wells Fargo employees had opened millions of unauthorized customer accounts to meet aggressive sales targets.
- Massive Fines and Penalties: Billions of dollars in fines were levied by various regulatory bodies, including the Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), and the Federal Reserve.
- Reputational Damage: The bank's public image and customer trust were severely eroded. Many customers closed their accounts.
- Leadership Changes: Several top executives, including the CEO, resigned.
- Asset Cap: The Federal Reserve took the unprecedented step of imposing an "asset cap" in 2018, restricting Wells Fargo's ability to grow its balance sheet beyond its 2017 levels until it addressed its risk management and compliance issues. This was a significant constraint on its business.
Why the Past Matters Now
The legacy of these scandals has driven Wells Fargo's focus on risk management, compliance, and cultural change. The bank has been under intense regulatory pressure to demonstrate it has reformed its practices and can operate ethically and effectively.
Step 2: Examining Current Regulatory Standing – A Key Indicator of Progress
The most critical factor in assessing Wells Fargo's current stability is its relationship with regulators and its progress in addressing past deficiencies.
The Removal of the Asset Cap
In early June 2025, the Federal Reserve lifted the asset cap imposed on Wells Fargo. This is a monumental development and a strong signal from regulators that the bank has made substantial improvements in its risk management and compliance frameworks.
- What it means: The removal of the asset cap allows Wells Fargo to pursue growth in deposits, new accounts, and investment banking businesses, which were previously constrained. This can significantly impact its revenue potential and market competitiveness.
- S&P Global Ratings' Outlook Revision: Following the asset cap removal, S&P Global Ratings revised its outlook on Wells Fargo & Co. (the holding company) to positive from stable, while affirming its long-term issuer credit rating at 'BBB+'. This reflects the expectation of continued improvement in risk management and rising risk-adjusted returns.
Progress on Consent Orders
Since 2019, Wells Fargo has made considerable strides in resolving regulatory consent orders. As of June 2025, 13 consent orders have been terminated, with only one remaining outstanding. This steady reduction indicates a strong commitment to rectifying past issues and building a more robust compliance culture.
Remaining Regulatory Scrutiny
While significant progress has been made, it's important to note that regulatory oversight isn't entirely gone. The bank still faces scrutiny, and its main operating bank entered a formal agreement with the OCC in 2024 related to financial crimes risk management and anti-money laundering controls. This indicates an ongoing, but seemingly more targeted, effort to ensure compliance.
Step 3: Analyzing Financial Performance – The Numbers Tell a Story
Beyond regulatory compliance, a bank's financial health is a direct measure of its stability. Let's look at Wells Fargo's recent performance.
Strong Profitability and Returns
- Wells Fargo reported a net income of $19.7 billion for the full year 2024, with diluted earnings per share of $5.37.
- The company achieved a 13.4% return on tangible common equity in 2024, approaching its target of 15%.
- Its risk-adjusted profitability has improved, with pretax income to regulatory risk-weighted assets rising to one of its highest levels since 2018.
Solid Balance Sheet and Capital Ratios
- Wells Fargo maintains a solid balance sheet with common equity Tier 1 (CET1) ratios consistently hovering just over 11% in the past year. This indicates a strong capital buffer to absorb potential losses.
- Its deposit base has stabilized and is expected to grow further with the lifting of the asset cap.
- Liquidity metrics remain steady, with a regulatory average liquidity coverage ratio of 125% in the first quarter of 2025.
Expense Management and Investments
- The bank has demonstrated a disciplined approach to expense management, with expenses declining 2% from a year ago in 2024, resulting in over $12 billion in gross expense savings over the past four years.
- Despite these savings, Wells Fargo has increased spending on risk and control work and technology, indicating a strategic investment in long-term stability and growth.
Credit Performance
- Wells Fargo has maintained strong credit discipline. While credit card charge-offs have normalized to a higher level as expected, overall credit performance is considered in line with expectations.
- The provision for credit losses declined in 2024, reflecting a reduction in its allowance for credit losses.
Step 4: Reviewing Credit Ratings – Independent Assessments
Credit rating agencies provide independent assessments of a company's financial strength and ability to meet its obligations.
Positive Outlook from S&P Global Ratings
As mentioned, S&P Global Ratings revised its outlook on Wells Fargo's holding company to Positive from Stable in June 2025, while affirming the 'BBB+' long-term issuer credit rating. This positive outlook signals that S&P believes Wells Fargo's creditworthiness is likely to improve over the medium term.
Stable Ratings from Morningstar DBRS
Morningstar DBRS confirmed Wells Fargo & Company's Long-Term Issuer Rating at AA (low) with a Stable Trend in May 2025. Its primary banking subsidiary, Wells Fargo Bank, N.A., has a Long-Term Issuer Rating of AA with a Stable Trend. These ratings are considered high, indicating a strong capacity to meet financial commitments.
Step 5: Considering Future Outlook and Strategic Direction
Wells Fargo's stability will also depend on its future strategy and how it leverages its newfound freedom from the asset cap.
Focus on Core Businesses and Growth
With the asset cap removed, Wells Fargo is expected to expand its commercial and investment banking business and pursue more deposits and new accounts. The bank has emphasized a conservative and gradual approach to growth, focusing on existing businesses and improving business margins rather than rapid expansion.
Continued Emphasis on Risk and Control
CEO Charlie Scharf has repeatedly stated the bank's commitment to prioritizing its risk and control environment. This ongoing focus is crucial for preventing a relapse into past issues and maintaining regulatory confidence.
Conclusion: A Bank on the Mend
Wells Fargo has embarked on a significant journey of reform and recovery. While the past scandals undeniably impacted its reputation and operations, the recent lifting of the Federal Reserve's asset cap, coupled with its strong financial performance, disciplined expense management, and improved credit ratings, paints a picture of a bank that is steadily regaining its stability.
It's clear that Wells Fargo is a different and far stronger company today than it was at the height of its scandals. The rigorous oversight it has endured has forced fundamental changes in its operations and culture. For customers and investors, this means a significantly more stable and compliant institution. While no bank is entirely immune to economic headwinds, Wells Fargo's current trajectory suggests a positive outlook for its long-term stability.
10 Related FAQ Questions
How to check Wells Fargo's credit ratings?
You can typically find Wells Fargo's credit ratings by checking the websites of major credit rating agencies like S&P Global Ratings, Moody's, and Fitch Ratings, or by visiting Wells Fargo's Investor Relations section on their official website.
How to know if my Wells Fargo deposits are safe?
Your deposits at Wells Fargo Bank, N.A. are insured by the Federal Deposit Insurance Corporation (FDIC) up to the standard maximum deposit insurance amount of $250,000
How to understand Wells Fargo's financial performance?
To understand Wells Fargo's financial performance, you can review their quarterly earnings reports, annual reports, and SEC filings available on their Investor Relations website. Key metrics to look for include net income, earnings per share (EPS), return on equity (ROE), revenue, and capital ratios.
How to find out about Wells Fargo's regulatory issues?
Information about Wells Fargo's regulatory issues and consent orders can be found in press releases from regulatory bodies like the Federal Reserve, OCC, and CFPB, as well as in Wells Fargo's own public statements and annual reports.
How to assess a bank's stability in general?
To assess a bank's stability, consider its credit ratings, capital adequacy (Tier 1 capital ratio, CET1 ratio), liquidity (liquidity coverage ratio), asset quality (non-performing loans), profitability, and regulatory compliance history.
How to understand the impact of the asset cap removal on Wells Fargo?
The removal of the asset cap allows Wells Fargo to grow its balance sheet, take on more deposits, and expand its lending and investment banking activities, which is expected to boost its revenue and profitability and enhance its competitive position in the market.
How to identify if a bank is a "systemically important financial institution"?
Systemically important financial institutions (SIFIs) are typically identified by regulatory bodies like the Financial Stability Board (FSB) based on their size, interconnectedness, and complexity. Wells Fargo is designated as a SIFI.
How to determine if a bank's risk management has improved?
Improvements in risk management can be seen through a reduction in regulatory fines and consent orders, positive feedback from regulators, and enhanced internal controls and compliance programs implemented by the bank.
How to interpret a "Positive" outlook on a credit rating?
A "Positive" outlook from a credit rating agency suggests that the rating may be upgraded in the medium term if the positive trends in the company's financial health, operations, or regulatory standing continue.
How to stay informed about Wells Fargo's future developments?
You can stay informed about Wells Fargo's future developments by subscribing to their investor relations updates, following financial news outlets, and reviewing their public filings and statements.