New accounts take a plunge

SAN FRANCISCO — Wells Fargo suffered a nose-dive in openings of new checking accounts during February, an indication that a scandal over bogus accounts lingers over the company, the embattled bank reported Monday.

However, customer loyalty scores improved for the fourth consecutive month during February, although compared to the same month in 2016, the loyalty ratings were weaker, the bank said.

During February, compared to the same month in 2016, the number of new checking accounts that were opened at the bank plummeted 43 percent.

Applications for credit cards plunged 55 percent in February compared to the similar period in 2016.

“Those are big numbers to be down,” said Ken Thomas, a Miami-based independent banking analyst.

Thomas believes that multiple factors are caus-

ing the drastic erosion in the new account activity.

“The big decline indicates the prior numbers were inflated by 40 to 50 percent, and they are also losing customers that they might have normally gotten, but who are now turned off by Wells Fargo,” Thomas said. “It’s a double whammy for Wells Fargo.”

Total customer interactions with the San Francisco-based bank fell 11 percent in February compared to same month the year before, the bank reported.

“It will take time for us to work through the changes we are making in our business,” said Mary Mack, head of community banking with Wells Fargo.

In September, Wells Fargo was fined $185 million after revelations emerged that bank employees opened up to 2.1 million bogus checking and credit accounts without the permission of its customers.

San Francisco-based Wells Fargo fired 5,300 employees, and eventually, John Stumpf, who was the chief executive officer who presided over a culture of high-pressure sales practices, retired and was obliged to forfeit $41 million in compensation.

“We remain focused on strengthening our relationships with existing customers and building new ones with potential customers,” Mack said.

During a conference call with analysts to discuss Wells Fargo’s retail banking activity in February, the bank stated that it is continuing a wide-ranging internal probe to determine what brought about the banking scandal.

“We are looking widely forwards and backwards into root causes,” John Shrewsberry, Wells Fargo’s chief financial officer, said during the conference call.

Despite the grim trends in the latest monthly report on banking activity, Wells Fargo believes it is gaining traction against the erosion in customer perception of the bank.

“When you look at the total number of customers year over year, those have increased, and deposits are up,” said Ancel Martinez, a spokesman for Wells Fargo.