Author Topic: WFC - Wells Fargo  (Read 190123 times)

John Hjorth

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Re: WFC - Wells Fargo
« Reply #610 on: November 27, 2017, 11:23:11 PM »
One more:

WSJ: Wells Fargo Bankers, Chasing Bonuses, Overcharged Hundreds of Clients.

This time it is forex banking. Honestly, this is getting a bit annoying now.

Thank you to Andy for guiding me to the article.
”In the race of excellence … there is no finish line.”
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rb

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Re: WFC - Wells Fargo
« Reply #611 on: November 27, 2017, 11:40:20 PM »
I don't have a WSJ subscription so I can't see the article but I can tell you it's a non-story. Every bank in the universe overcharges their clients on FX. Lots of their clients know it too. And yes, it helps with bonuses as well.

Also the FX market is completely unregulated. Pretty much the wild west. It's really hard to do anything illegal in FX. The worst you could do is piss off some government (not good) but most traders stay away from that sort of stuff and just overcharge clients.

John Hjorth

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Re: WFC - Wells Fargo
« Reply #612 on: November 27, 2017, 11:58:39 PM »
rb,

To put some shade on what it's about, you can visit Andys tweet, which actually gives full access to the WSJ article [it does to me, actually].
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

rb

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Re: WFC - Wells Fargo
« Reply #613 on: November 28, 2017, 12:14:22 AM »
Thanks John, the link did gave me access to the article. No surprises there. What is described are standard FX practices in the banking industry and I'm not just talking about North America but Europe as well. Not entirely sure about Asia but I don't see why it would be any different.

Furthermore, as I've said previously, most clients know about it (3G knew about it) and there really isn't anything illegal about it.

This is definitely not a Wells Fargo issue.

Viking

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Re: WFC - Wells Fargo
« Reply #614 on: January 12, 2018, 09:43:12 AM »
For the past 6 months I have been listening to the WFC conference calls and industry presentations and hoping that a few rays of sunshine will start to shine through. I have been disappointed and the call today was the same (disappointment). I appears to me that it is likely 2018 will be another lost year for shareholders where WFC will again underperform peers. Expenses will remain elevated. Revenue growth will likely be muted (compared to peers). On the call today the CEO was asked if the sales scandal issues are finally largely behind the company and the CEO said no he could not say that... leading rational people to wonder what issues will hit in 2018. I am starting to wonder if the issues at WFC go deeper and the new WFC is simply never going to match the financial results of the former WFC (low expenses and crazy high ROE). The fact that Buffett owns 10% of the company keeps pulling me back to it (to want to own it). And then I look at the business results and listen to management and get completely turned off. Their competitors like JPM just look to be so much better run and their management team sounds so much more polished on the calls and the business results of JPM will likely be much better in 2018. WFC looks like a company trying to play a great defensive game with one hand tied behind its back (sales scandal and its after effects) whereas JPM is playing Michael Jordan offense. Not hard to pick with will win the game.

It is interesting to me how over 5 and 10 years companies can rise and fall. 5 years ago WFC was clearly viewed as the best managed large US bank. I think JPM has now passed them. I think BAC could also pass WFC in the next couple of years.

John Hjorth

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Re: WFC - Wells Fargo
« Reply #615 on: January 13, 2018, 03:08:29 PM »
I read the WFC 2017Q4 documents last night, and I must say, that I'm disappointed, like Viking.

I started looking for some explanations. Especially two observations really caught my attention.

We knew that there would be some unforseen changes to taxes, because of the US Tax Reform. So I started by looking at the income statement from down and upwards, starting with profit before tax. The WFC 2017 profit before tax has actually declined vs 2016. I was really surprised by that. Searching for explanation line by line upwards, one instantly catch a large change in other non interest expenses. The figure for 2017 is USD 17.558 B vs 2016 USD 13.115 B. The difference is actually a lot compared to a pre tax profit of USD 27.377 B, down from 2016 USD 32.120 B. After reading further on and after studying the presentation material, I observed that there is a USD 3.251 B litigation accrual contained in other non interest expenses [related to the scandals and derived lawsuits] in 2017Q4. It's ugly. Every time folly and/or misconduct in a bank has been going on, the shareholders end up with the bill.

Furthermore, the loan book basically hasn't grown in 2017.  JPM reported 6 percent loan book growth for 2017, and 2 percent loan book growth 2017Q4 QoQ, indicating accelerating loan book growth. This is striking. I don't understand it yet, but I will try to seek some explanation of it in the figures. All input from fellow board members is very welcome on this. If this is about WFC loosing business relatively because of the scandals, the scandals are real calamities of enormous dimensions.

The loan book size and the size of deposits are the crank in the engine of every money machine called a bank.

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I'm thinking about the WFC business model also. Is WFC going digital fast enough, and is debranching taking place at an appropriate speed?

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What is it, that we are observers to here? The big four US banks constitutes a material part of the whole US banking system. Is WFC getting smoked here by JPM and BAC actually now pulling away - for good - from WFC going forward, or is this a run between three rabbits and a turtle, WFC beeing the turtle by just continuing doing its thing, and not get in trouble when the three rabbits in the future have started to stumble and lay in one big bunch on the road when the turtle passes them?

There is a material element of black box investing in bank investing related to the loan books. Those of us invested long in these creatures have been buying rubber band by the yard.
« Last Edit: January 13, 2018, 04:10:43 PM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

boilermaker75

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Re: WFC - Wells Fargo
« Reply #616 on: January 14, 2018, 07:18:32 AM »

Viking

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Re: WFC - Wells Fargo
« Reply #617 on: January 14, 2018, 10:39:17 AM »
I looks to me like WFC underinvested in their business pre 2016 (which drove higher short term profits). It appears they also have been slower to transition to the new digital world which suggests poor long term planning. They certainly are paying a steep price today for their mistakes. As we learned with C and BAC, it takes many years for these big super tanker banks to right the ship and it can be a painful voyage for shareholders.

Spekulatius

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Re: WFC - Wells Fargo
« Reply #618 on: January 15, 2018, 02:29:59 PM »
WFC online banking (and brokerage) GUI is less capable than that of many credit unions 1/100 their size and certainly BofA's. Their mortgage salespersons are not competitive either with respect to rates and ease of dealing with them (my personal recollection as well as that from colleagues. I think the bank is retreating probably as consequence of the reboot due to the scandals.

I would WFC to have a few years of stagnation before they can resume growing as fast as their competitors again. That will be the true cost of this scandal 3-5 years of stunted growth, not the few hundred million in fines, which are really peanuts on their income statement.
To be a realist, one has to believe in miracles.

John Hjorth

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Re: WFC - Wells Fargo
« Reply #619 on: January 15, 2018, 02:56:45 PM »
Thank you to boilermaker, Viking and Spekulatius for sharing thoughts, insights & facts here about WFC.

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Only partly on topic:
Right now, I don't know what to think about Berkshire being a forced WFC seller, also.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai