Oct. 11 (Bloomberg) -- Wells Fargo & Co., the fourth-biggest U.S. bank, extended the maturity of some borrowing in short-term money markets through the end of the month to prepare for a possible U.S. default.
“We’ve ‘termed out’ some repo financing over the end of the month,” Chief Financial Officer Timothy Sloan said in an interview today. Most market participants may have done the same as the U.S. closed in on its debt ceiling, he said. “We make sure we have adequate liquidity in all of our operating entities,” he said.
Banks braced for the prospect of a default as the dispute among lawmakers and President Barack Obama over the U.S. budget shut down parts of the government and left the nation within days of being unable to pay all its bills. Wells Fargo Chief Executive Officer John Stumpf called the developments troublesome and said the uncertainty was hurting the economy.
Extending the maturities didn’t increase costs materially since the lender isn’t too reliant on financing through money markets such as repurchase agreements, Sloan said. The small size of its securities unit also means the challenge of how to account for Treasuries as collateral isn’t a big concern, he said.
“If you look at the size of our broker-dealer operation relative to the whole company, they are a relatively small percentage of our total assets,” Sloan said. “So it’s not overly expensive.”
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