(Bloomberg) -- Wells Fargo & Co. Chief Executive Officer Charlie Scharf said the Federal Reserve’s asset cap isn’t doing much to limit his bank’s activities at the moment but he expects it will in the future.
“The asset cap today is not a material limitation just because of where the trends in deposits and where loan demand is,” Scharf said Tuesday at the Goldman Sachs US Financial Services Conference. “It has been and it will be again.”
The fourth-largest US bank has been hobbled by a Fed order limiting it to its size at the end of 2017 for more than five years — longer than Scharf’s tenure. The punishment is tied to a series of scandals at the bank that began with fake accounts seven years ago. Wells Fargo executives privately expect the restriction to stretch into 2025, Bloomberg News reported last month, citing people familiar with the matter.
In the wide-ranging conversation, Scharf also said the economy is stronger than expected. Consumer spending is consistent and, as for businesses, “with all the talk of rising rates and potential downturns, they’re positioned extremely well,” he said.
The San Francisco-based company expects to see losses in its portfolio of office loans in the fourth quarter and next year, Scharf said, adding that Wells Fargo is “conservatively reserved.”
The bank expects more severance costs than it had anticipated in the fourth quarter as turnover declines, the CEO said. Wells Fargo is “still working through this, but we’re looking at something like $750 million to a little less than $1 billion of severance” for the period “just because we want to continue to focus on efficiency,” he said.
Read More: Wells Fargo Cuts About 50 Investment Bankers Amid Deal Slump
(Updates with expected severance costs in last paragraph.)
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