NEW YORK (AP) — Wells Fargo is cutting its aggressive product sales goals for retail bankers, the bank announced Tuesday after state and federal regulators fined it $185 million last week for allegedly opening millions of unauthorized accounts to meet those targets.
The product sales goals will be eliminated by Jan. 1, the San Francisco-based bank said in a brief statement.
Regulators said in announcing the fine that Wells Fargo sales staff opened more than 2 million bank and credit card accounts that customers may not have authorized, and money in their accounts was transferred to the new accounts without authorization. Debit cards were issued and activated, as well as PINs created, without telling customers.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services, regulators said.
Wells Fargo has been known for its aggressive sales goals for its employees. Bank executives highlight every quarter the so-called cross-sale ratio, which is the number of products the bank sells to each of their individual customers. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank. Wells Fargo also had a program called go for “Gr-Eight,” a company-wide push to get more than eight products per household — a metric that the program never reached.
The executive who ran Wells’ consumer banking division, Carrie Tolstedt, had announced earlier that she would retire from Wells at the end of the year. Despite running this troubled division of Wells, Tolstedt, 56, will walk away with roughly $125 million in compensation in a mix of stock, salary and stock options.
Wells Fargo declined to comment on whether it was considering implementing its executive compensation clawback provisions regarding Tolstedt. The bank adopted a somewhat aggressive clawback provision in 2013 that would apply to Tolstedt as a highly paid executive. One of the triggers for Wells’ provision could be if the executive’s business group “suffers a material failure of risk management” or misconduct that “expected to have reputational or other harm to the company.”
The Consumer Financial Protection Bureau fined the bank $100 million, the largest fine the agency has levied against a financial institution since it was created five years ago. The bank will also pay $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles. It will also pay restitution to affected customers.
Roughly 5,300 employees at Wells Fargo were fired in connection with this behavior, according to the city attorney’s office.
Wells Fargo has said it regrets “any instances where customers may have received a product that they did not request” and that it has refunded $2.6 million in fees associated with products that were opened without authorization.
The bank’s shares dropped more than 2 percent to $47.12 in morning trading Tuesday.