Wells Fargo Obtains Licence to Expand Luxembourg Business
Wells Fargo & Company WFC is on track to continue performing operations smoothly post Brexit, as it recently obtained permission from the financial regulator of Luxembourg for expansion of its asset management business in the country.
With this move, Wells Fargo will be able to open new branches in Frankfurt and Paris and smoothly serve its existing European Union (“EU”) clients. Also, the company will be able to serve European institutional investors with discretionary portfolio management and investment advisory services.
Per the head of International Distribution for Wells Fargo Asset Management, Deirdre Flood, the strategic move will help Wells Fargo brace itself against the uncertainties surrounding Brexit.
He added, “By strengthening the capabilities of WFAM in Luxembourg, along with dedicated WFAM branches in Frankfurt and Paris, we are well positioned to deepen relationships with our European client base, as well as with investors based in other international markets.”
In October 2018, Wells Fargo had applied for an investment firm licence to the French regulator, which will be held by Wells Fargo Securities Europe S.A. in Paris. Through this branch, the company plans to offer a range of capital markets and investment banking services to its European and international customers that require access to the EU.
Both this announcements form part of the company’s Brexit strategy, which is aimed at supporting the capital markets and investment banking needs of its customers in a post Brexit environment.
Notably, Wells Fargo finally attained the customary final court approval for settlement of the fake accounts scandal related to class action lawsuit that was filed against it by its shareholders in September 2016. The settlement amount of $480 million was approved by both the parties in May 2018.
Also, shareholders who bought Wells Fargo’s common stock in the period between Feb 26, 2014, and Sep 20, 2016, will be eligible to claim the refund. The San Francisco-based bank had fully reserved the amount as of Mar 31, 2018.
Wells Fargo still has a long road ahead in clearing its reputation and convincing the Federal Reserve to pull back the asset cap that was placed in February.
The stock has lost 17.9% over the past six months compared with 15.4% decline recorded by the industry it belongs to.
Wells Fargo currently carries a Zacks Rank #4 (Sell).
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