Wells Fargo sets aside even more to deal with the fallout from its accounts scandal

Natasha Clark
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Wells Fargo Reports Quarterly Earnings
The troubled bank is facing multiple lawsuits and has had to shell out for fines (Source: Getty)

Wells Fargo revealed today that up to $1.7bn (£1.4bn) has been set aside to deal with legal costs from its fake accounts scandal.

The troubled financial giant's filings were not fun reading for investors – barely a week after it announced it would be paying out $185m for a fine to settle allegations that employees had created 2m accounts for customers without their permission.

Reports have also emerged that federal, state and local government agencies, as well as Congress, are looking into the matter too. The Securities and Exchange Commission is investigating whether Wells violated rules around investor disclosures, and has sent requests to the bank for information.

The misconduct was carried out by low-level branch staff to meet internal sales targets, but has severely damaged the brand.

Read more: Wells Fargo faces two more lawsuits over bank accounts scandal

It has also agreed to pay out $50m to settle a lawsuit that accused the bank of overcharging hundreds of thousands of homeowners for appraisals after they defaulted on their mortgage loans.

John Stumpf stepped down as the chairman and chief executive of the San Fransico bank last month, to be replaced by well-liked former chief operating officer Tim Sloan.

Last month's accounts showed Wells Fargo's profits dipped in the last quarter. The bank posted earnings of $1.03 per share, slightly up on estimates. Revenue came in at $22.32bn, just up from the prediction of $22.21bn.

Shares in the company have tumbled since the scandal came to light, and it was trading at 45.49 on the NYSE yesterday afternoon.

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