Wells Fargo & Co. (WFC) , the U.S. bank already reeling from sanctions by regulators over alleged customer abuses, was fined an additional $1 billion by regulators over allegations over matters including auto insurance and mortgage-sales practices.
The fine stemmed related to harm to customers from a mandatory insurance program associated with auto loans, as well as violations in how it charged certain borrowers for interest-rate-lock extensions, according to a statement Friday by the U.S. Consumer Financial Protection Bureau. A separate $500 million penalty imposed by the Office of the Comptroller of the Currency, or OCC, which supervises national banks, was credited toward the satisfaction of the CFPB's fine.
"The OCC took these actions given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank's failure to correct the deficiencies and violations in a timely manner," the comptroller's office said in a statement.
The San Francisco-based company had disclosed the potential cost last week in a press release on preliminary first-quarter results, noting that the earnings could be revised pending the outcome of the discussions with regulators.
Wells Fargo, led by CEO Tim Sloan, is struggling to recover from a series of scandals stemming from an alleged corporate culture of aggressive sales practices, including the opening of millions of unauthorized accounts on behalf of customers and selling them unnecessary auto insurance. In February, the Federal Reserve took the unprecedented step of barring the bank from further asset growth until risk management and board oversight improves.
Sloan has estimated that those sanctions could cost $300 million to $400 million after taxes this year. In 2016, Wells Fargo paid $185 million to regulators including the CFPB to resolve allegations related to the unauthorized accounts. The company has since pledged to overhaul its business practices and announced changes to its board of directors.
Wells Fargo stock rose about 2% to $52.58 in trading on the New York Stock Exchange as of 10:20 a.m. on Friday