- CFPB fined Wells Fargo last week for opening bogus accounts
- Bank stocks pressured as traders bet against Fed rate hike
Wells Fargo & Co. lost its title as the world’s most valuable bank to JPMorgan Chase & Co.
Wells Fargo, which is grappling with the fallout from claims that its employees created fake customer accounts, slumped 3.3 percent to close at $46.96 Tuesday in New York. That reduced the firm’s market value to $236.9 billion, compared with $240.3 billion for New York-based JPMorgan.
Wells Fargo was fined $185 million last week after the Consumer Financial Protection Bureau accused bank employees of creating deposit and credit-card accounts without clients’ approval to reach sales goals. Chief Executive Officer John Stumpf has been asked to testify in Washington about the alleged misconduct, while the San Francisco-based bank agreed to eliminate sales goals for retail bankers, effective Jan. 1.
“The company’s operations are being impacted by the investigation,” Piper Jaffray Cos. analysts led by Kevin Barker said Tuesday in a note. “The financial tailwind from the sales mishaps was immaterial to the company’s fee revenue, but the elimination of product sales goals could materially change how the company’s retail banking segment operates and the fee revenue it generates.”
Bank stocks also were pressured Tuesday as traders reduced bets that the Federal Reserve will increase interest rates at next week’s meeting. JPMorgan fell 0.8 percent, while the 24-company KBW Bank Index slid 1.6 percent, extending its decline for the year to 2.7 percent.
Wells Fargo and JPMorgan are among the top 20 largest firms by market capitalization globally. Apple Inc., the biggest, is valued at more than $582 billion, while Google parent Alphabet Inc. is second at $531 billion.