Wells Fargo & Co. (NYSE:WFC) failed to pass a key regulatory test for the second this year as the bank need a better plan to persuade U.S. regulators that it could survive without tapping into public funds during the financial crisis.
On Tuesday, the Federal Reserve and Federal Deposit Insurance Corporation rejected Wells Fargo’s “living will” plan and said that the bank would be sanctioned. The bank will be banned from setting up international units and buying non-bank business.
This is the second time Wells Fargo failed the test. In April, Wells Fargo and other four banks failed an initial assessment. Those banks are JPMorgan Chase, Bank of America, State Street Corp and Bank of New York Mellon. But these banks all passed the test this time.
“We will continue to work closely with the agencies to better understand their concerns so that we can bring our resolution planning processes in line with their expectations,” Wells Fargo said in a statement on Tuesday. “We believe we will be able to address the concerns raised today in the March 2017 revised submission.”
Wells Fargo shares fell 1.48 percent to $55 in New York. The stock only gained 2.7 percent this year. The living-wills test is a key part of Dodd-Frank. Since Donald Trump becomes president, investors has expected that there will be less regulation for the banks.