U.S. banking regulators said Monday that Wells Fargo has fixed deficiencies in its federally required “living will,” a blueprint designed to detail how the bank could be dismantled in a failure without relying on taxpayer bailouts.
Monday’s announcement follows a December decision by the Federal Reserve and Federal Deposit Insurance Corp. to slap the San Francisco-based bank with sanctions for failing to correct problems in its 2015 living will, also known as a “resolution plan.” The regulators gave Wells until March 31 to fix the deficiencies or face limits on the bank’s asset size.
On Monday, the regulators said Wells had adequately remediated its deficiences and, as a result, will no longer be subject to growth restrictions imposed on it last year. In December, the regulators had banned Wells from establishing international bank entities, such as a branch in a foreign country, or acquiring nonbank subsidiaries.
In a statement, Wells Fargo said it is pleased by the regulators’ ruling. The bank also said it remains “committed to sound resolution planning and preparedness” as it, along with other big banks, prepare for a July deadline to file 2017 versions of their wills.
Big banks are required to file the wills under the 2010 Dodd-Frank financial-overhaul law.
December’s actions by the regulators added to the fallout for Wells Fargo, which was also reeling from sales scandal over fake accounts that erupted in September. The December sanctions meant Wells Fargo became the first bank to have regulators impose penalties on it for living will shortcomings.
Regulators had identified deficiencies in the living wills of Wells Fargo and four other banks in April of last year, giving them until October to fix the problems. In December, the regulators said Wells was the only bank among the group that had not adequately remedied all of its deficiencies.
Monday’s announcement gives Wells Fargo some good news one day before its board and managers are expected to face investors at the bank’s first annual meeting of investors since revelations of the fake accounts.
The potentially contentious meeting is set for Tuesday morning at a hotel in Ponte Vedra Beach, Fla.