As Wells Fargo fights to come out from under a fake-account scandal that has forced its former CEO and chairman to retire, there is talk that branch closures may be in the near future.
Over the last few years, the Wells Fargo network has held strong, with only 2 percent of its branches closing, compared with 9 percent for JPMorgan Chase and 15 percent for Bank of America, WSOC reports.
The bank currently maintains 6,000 branches across 39 states, which is 1,000 branches more than any other bank in America, according to CNN Money.
As previously reported on The Root, last month the banking giant agreed to pay $185 million in fines and penalties after it was revealed that branch employees had created nearly 2 million fraudulent accounts in the names of unsuspecting current customers. The scandal launched several congressional hearings and forced the retirement of CEO and Chairman John Stumpf.
While Wells Fargo has not announced any branch closures, its need to find ways to pay for the mounting legal and compliance costs related to the fraud issue, topped with the loss of credibility in the consumer market, may cripple its ability to make money.
“Whether Wells Fargo realizes it or not, they’re going to be closing 1,000 branches,” analyst Mike Mayo of investment banking company CLSA told CNN Money. “It’s a matter of when, not if.”
Mayo also said that the pressure to make money to keep branches open may have been a contributing factor in the creation of the fraudulent accounts.
During a presentation for analysts last week, Wells Fargo hinted at branch closures. The bank said that a renewed focus on mobile and online banking would allow it to review its “branch footprint for consolidation opportunities.”
Wells Fargo is still contending with ongoing investigations, including an internal review of the fraudulent-account scandal and a California investigation into whether or not the bank committed identity theft when making the fake accounts.
Analyst Paul Miller of investment bank FBR & Co. said that Wells Fargo senior management is in crisis mode right now.
“They’ve still got to figure out how to get back on everyone’s Christmas list,” Miller said, according to CNN Money.