Acknowledgment
First, I thank Almighty God for guiding us in all the ways of life and fulfilling our intentions successfully. I owe my sincere gratitude to my supervising Professor Ms. Gudrun Tim, International University of applied sciences (IUBH), Bad Honnef, for her excellent guidance, generosity and whole-hearted support to make this paper a fruitful endeavor.
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I take this opportunity to thank all the library staffs of our university for providing necessary materials useful for the preparation of this paper.
I wish to express sincere thanks to all my friends for their excellent help and co-operation.
Abstract
Wells Fargo was found in 1852 by Henry Wells and William Fargo in San Francisco, California. It is the world’s second-largest bank by market capitalization and the fourth largest bank in the U.S. by total assets. Since 2011 Wells Fargo bank workers had created millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent. It all started in September 2016, when Wells Fargo shocked the nation by announcing that it has fired around 5300 employees over several years for creating millions of illegal fake accounts. Various regulatory bodies, including the Consumer Financial Protection Bureau (CFPB), fined the company a combined $185 million because of this illegal activity, and the company faces additional civil and criminal suits.
• Using fake signatures, phony PIN’s and dummy e-mail addresses, the company was able to accomplish this.
• The controversy resulted in the resignation of CEO John Stumpf, and an investigation into the bank led by U.S. Senator Elizabeth Warren.
TABLE OF CONTENTS
1. Introduction …………………………………………………….
2. Literature review…………………………………………………
3. Methodology…………………………………………………….
4. Findings………………………………………………………….
5. Conclusion……………………………………………………….
6. References………………………………………………………..
1. INTRODUCTION
Wells Fargo is an American bank whose motto is “standing together with our customers and communities” (https://www.wellsfargo.com/about). The company is a provider of banking, loans, mortgages and credit card and reportedly places focus on selling additional services to customers. More than two years ago, the banking world was rocked by the news of Wells Fargo scandal. The federal government revealed in September 2016 that the bank had been opening accounts and new credit cards in its customers’ names without telling them. As many as 3.5 million fraudulent accounts were created. The bank has since refunded customers, wrestled with multiple probes and lawsuits, paid hundreds of millions in fines to regulators, released thousands of employees associated with the fraud.
And it is still working on making things right
Wells Fargo by the numbers
• 265,000: Employees as of September 2018
• 15,500: Iowa employees
• 14,000: Des Moines-area employees
• $88.4 billion: Annual revenue for the fiscal year 2017
• $22.2 billion: Annual profit for the fiscal year 2017
• $52.82: Price of one Wells Fargo share at close Thursday (Up 1.28 percent)
Wells Fargo is said to face a long road to rebuild its trust
2. Literature Review
Not only making more money to the bank but, more importantly, to boost sales figures so that employees involved could reach quotas and qualify for incentive bonuses.
Without customers authorization, as many as 2 million Wells Fargo bank accounts and credit cards were opened by the bank employees.
What was the big picture impact of the scandal? Who was really hurt?
The main people hurt in this scandal were the investors/shareholders, the consumers and the low-level employees of Wells Fargo.
The scandal has led to the firing of nearly 5300 employees and 5 billion is set aside for customer refunds on fees for accounts the customers never wanted.
Reasons for the scandal
Cross-selling -selling a non-identical product or service to an existing customer
• To meet sales goals
• Incentive bonuses for employees
How credibility can be restored among stakeholders?
Credibility refers to the organization’s history and how it develops reputational expectations over time. People commonly lose trust in a company after a scandal. Building a new one can be easy, but it’s a very different thing about repairing a reputation. Once enjoying a sterling reputation in the banking industry, now it has been rocked by the years of trouble.
Governance issue in the bank
Various stakeholders involved and how they acted?
Measures to the stock price development
3. Research Methodology
The information is mainly retrieved from the internet via journals, articles and other reliable sources like the New York Times, The Economist, The Guardian etc.
4. Findings
Customers and lawbreakers are demanding answers.
5. Conclusion
The fake account controversy has led the bank to remain in an uncertain condition as even other scandals keep emerging. It paints the picture of a bank that has repeatedly abused its customers. (CNN business). Thus, it can be said the scandal is responsible for undermining the shareholder’s values.
One of the topmost priority of Wells Fargo is to rebuild its lost trust with customers, team members, shareholders, communities and regulators.
6. References
