Wells Fargo & Co. (WFC
) is dropping its sales goals for retail banks after a firestorm over its recent sales practices that led to employees opening more than two million false accounts. Analysts did not react directly to the new customer-relations strategy.
The San Francisco-based bank said product sales goals will be eliminated by Jan. 1 2017 to focus on “lifelong relationships” and restore a “service culture.”
“We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers,” CEO John Stumpf said in a Sept. 13 statement.
Under significant pressure to reach sales targets, Wells Fargo employees opened more than 2 million accounts without the account-holder’s approval. As the controversy came to light, Wells Fargo, while firing 5,300 employees, agreed
to both refund $5 million in fees it had charged the customers and pay $185 million in fines.
Analysts have been slow to respond to the turmoil. In the last 30 days, three analysts offered ratings, and all were in the past week. Of the three, one was positive, one was negative and one was a “hold.”
Sandler O’Neill, which reiterated a “hold” rating, said it does not expect the settlement and controversy to significantly impact Wells Fargo’s financials, calling it “small in the grand scheme of things, but still unfortunate.”
“We will continue to keep an eye on dynamics such as WFC’s consumer cross-sell ratios but doubt that any ramifications from [the] settlement would even be visible except over a very long time horizon,” Sandler O’Neill analysts said in a Sept. 8 note.
Analysts’ average price target in the past 30 days is $50.50, representing a 7 percent upside from recent trading prices.