Wells Fargo formal OCC agreement a ‘step back,’ says Citi

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.