Citi analyst Keith Horowitz calls Wells Fargo’s formal agreement with the Office of the Comptroller of the Currency related to deficiencies concerning its financial crimes risk management as a “step back.” However, this is not a consent order and does not include a monetary civil penalty, the analyst tells investors in a research note. As a result, the firm does not expect a meaningful change to the expense outlook and it notes Wells reiterated its outlook as recently as this week. The stock traded down 4% on the news, which “seems strong” but reflects the overhang from existing consent orders, contends Citi. It keeps a Neutral rating on the shares with a $63 price target.
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