Page 63 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

e nes considered as a percentage of their Tier-1 capital were also less onerous than the experience of Bank of America – the annual nes constituting an annual average of only 2.59 percent of core capital.
As with Bank of America, however, 2014 was a particularly bad year. Citigroup was ned a total of USD 8 billion in a year that they made USD 19.6 billion pro t after tax.
In the case of Wells Fargo, the least ned of the big four US banks; the experience was far less deleterious to pro ts and capital. ey were ned a total of only USD 9.5 billion over the four-year period from the beginning of 2012, and during the same period made a pro t after tax of USD 117.4 billion.
Of course, 2016, a year not covered within the Monocle nes database, has been a bad year for Wells Fargo. Whereas in February 2014 they were named the world’s most valuable banking brand for the second year running, they are currently under investigation by the Securities and Exchange Commission in relation to their account sales practices.
In September 2016, they were ned USD 185 million – a pittance compared to the nes issued against their peers – for creating over 1.5 million checking and saving accounts and 500 thousand credit card accounts that its customers never authorised. e O ce of the Comptroller of the Currency, the City and County of Los Angeles, as well as the Consumer Financial Protection Bureau were the primary complainants in a case in which the very business model which Wells Fargo was most admired for – namely incentivising employees to create new accounts – was the cause of their fraudulent practices.
Over 5300 employees were dismissed, shortly after the head of the department who ran the cross-selling practice, Carrie Tolstedt, had retired in July of 2016. She received the equivalent of USD 124.6 million in stock, options and restricted shares as a retirement package – a payout that has gone a long way to further damaging any argument in favour of cutting back on oversight in banking.
In the wake of the public outrage against the bank, and especially in a political atmosphere in which both the Democratic and Republican candidates for presidency had taken a hard and unwavering stance against the banks, John Stumpf, Chairman and CEO and up to that point much admired in the industry, announced on October 12 that he too would retire. It will be interesting to observe in years to come whether any
“As with Bank of America, however, 2014 was a particularly bad year. Citigroup was ned a total of USD 8 billion in a year that they made USD 19.6 billion pro t after tax.”
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