What's going on?
The CEO of Wells Fargo – now America’s fourth-largest bank – abruptly announced his departure on Friday as a long-running account fraud scandal claimed its second head honcho in three years.
What does this mean?
To lose one chief may be regarded as a misfortune; two looks like carelessness. Wells Fargo – a rare island of stability in 2008 – has been under pressure from US regulators since 2016, when they imposed hefty fines following revelations employees had opened millions of fake customer accounts to hit sales goals.
Wells Fargo’s profit potential will be in the wood chipper until it can convince regulators to lift a ban on growing its business imposed last year. To that end, the bank’s now pointedly looking for a company outsider as its new CEO. Investors aren’t celebrating just yet, however – shares fell 2% on Friday.
Why should I care?
For markets: A new CEO is the new black.
Over in Sweden, the chief executive of Nordic-Baltic giant Swedbank was fired last week after reports of deeper involvement with what may be the largest money-laundering operation in history. Swedbank’s stock lost a quarter of its value last week amid reports that US regulators (renowned for their hefty fines) could investigate. The same money-laundering scandal brought down the CEO of Denmark’s Danske Bank in September. Canning your CEO is no guarantee that things will get better, however: Deutsche Bank (which has itself had to pay hundreds of millions in US fines over money laundering) ousted its chief a year ago as it struggled for profitability – but the stock has since fallen another 35%.
Zooming out: Europe’s final countdown.
A decade on from the last financial crisis, European investment banks are still struggling for profits amid low interest rates and volatility – and tighter regulation also chafes. Investors won’t have to wait too long to see how bad things really are: Switzerland’s Credit Suisse kicks off European banks’ first-quarter earnings season on April 24th.