Wells Fargo had another surprise for investors in the form of its biggest legal charge yet, showing the lender isn’t past its consumer banking scandals.
The $3.25 billion fourth-quarter hit to earnings comes after the lender took a $1 billion charge in the third quarter toward a potential settlement with regulators over pre-crisis mortgage sales. All the litigation costs drove the firm’s expense ratio for 2017 to the highest level in more than 20 years.
This latest charge stems from “a variety of matters, including mortgage-related regulatory investigations, sales practices, and other consumer-related matters,” the San Francisco-based lender said in a statement Friday.
Wells Fargo has been struggling to cut costs and expects to close 250 of its 5,900 branches this year as part of a plan reduce its network to 5,000 by the end of 2020.
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The company has also started selling units and pledged to slash expenses over the next two years, efforts that analysts expect will help bring its expense ratio back in line with its long-term goal.
Wells Fargo has endured a rash of consumer scandals since regulators fined the bank in September 2016 for opening millions of potentially unauthorized customer accounts.
Fresh issues arose last year over insurance forced on auto-loan customers and fees incorrectly assessed to customers looking for mortgage loans. The fake accounts were again a flash point in August, when it revised the number of customers potentially harmed to 3.5 million.