Wells Fargo Credit Rating Cut by Fitch on Risk Controls, ProfitHannah Levitt
Wells Fargo & Co. had its credit rating cut by one level by Fitch Ratings on concerns about the bank’s governance and lower future earnings.
The lender’s long-term rating fell to A+ from AA- and the outlook is stable, Fitch said Tuesday in a statement. The bank subsidiary was also cut one grade to AA-, the ratings company said.
“We do not believe WFC’s earnings profile will continue to exceed peers to the same degree as in the past, and we acknowledge several notable missteps in the company’s risk controls that warrant the downgrade,” Fitch analysts wrote, referring to the bank by its stock ticker.
Fitch said it was surprised by Wells Fargo’s admission of control weaknesses in areas beyond those it disclosed last year, such as its consumer auto-lending business. The ratings firm also said the lender’s earnings will be hit by new rules that require it to have more long-term debt and loan losses that will rise from “currently unsustainably low levels.”
Chief Executive Officer Tim Sloan testified in front of the Senate Banking Committee Tuesday, speaking about efforts the bank has taken since last year’s fake accounts scandal. Senator Elizabeth Warren, a Massachusetts Democrat, called for Sloan to be fired, while Sloan said he was committed to helping the lender regain public trust.