Connect with us

Investing

Wells Fargo expects to pay up to $1.8 billion to help refill FDIC fund

Published

on

© Reuters. FILE PHOTO: Wells Fargo Bank branch is seen in New York City, U.S., March 17, 2020. REUTERS/Jeenah Moon/File Photo

NEW YORK (Reuters) -Wells Fargo said on Tuesday it expects to pay as much as $1.8 billion to help replenish a government deposit insurance fund that was drained of $16 billion this year after three banks collapsed.

Under a Federal Deposit Insurance Corporation (FDIC) proposal, Wells Fargo (NYSE:) estimates it will face a pretax “special assessment” of up to $1.8 billion, which it will set aside to pay when the FDIC finalizes the rule, the bank said in a regulatory filing on Tuesday.

Banking giants are likely to bear most of the costs of replenishing the fund, the FDIC said in May.

Wells Fargo also said that separate proposals on U.S. capital rules could lead it to rejig its balance sheet.

In one of the first public comments from a major U.S. lender since the proposals were released last week, Wells Fargo said the new guidelines would alter its risk gauges for lending, trading and internal operations.

“The company expects a significant increase in its risk-weighted assets and a net increase in its capital requirements based on a preliminary assessment of the proposed rule,” the bank said.

If the norms are fully implemented, they would result in an increase in capital requirements for large banks by an aggregate 16% from current levels, with the largest and most complex firms being most affected, regulators said.

Wells Fargo also said in Tuesday’s filing it was in talks to resolve investigations by the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission over employee communications on unapproved messaging channels.

In September, U.S. regulators fined 16 financial firms a combined $1.8 billion after workers discussed deals and trades on their personal devices and apps.

Wells Fargo authorized a new share buyback program of up to $30 billion after its second quarter profit jumped 57%. The lender also raised its dividend after passing the Federal Reserve’s annual health check.

Read the full article here

Trending