Fitch cuts Wells Fargo outlook to negative, cites possible reputational damage
Fitch Ratings has affirmed Wells Fargo ratings at 'AA-/F1+' and Wells Fargo Bank's ratings at 'AA/F1+.' The rating outlook is revised to Negative from Stable. "The affirmation reflects the company's superior earnings profile, strong liquidity, and still benign asset quality. Fitch has revised the outlook to Negative given the uncertain impact to WFC's franchise resulting from the potential reputational damage from the recent regulatory actions and fines related to its sales practices in its Community Banking business line. In particular, Fitch believes that the firm could face earnings pressure as a result, with earnings being a significant competitive strength for WFC... Fitch views the ensuing reputational damage, risk oversight failures, impact to its selling practices, and the resulting effect on earnings as much larger issues than the actual fine," the agency said.