Wells Fargo is making major changes to how it manages retail staff, and one prominent banking sector analyst says other big Wall Street banks may have to follow suit.
The San Francisco-based bank's culture and compensation practices are coming under scrutiny from federal prosecutors, according to a Dow Jones report late Wednesday.
Wells Fargo is killing off product sales goals for its retail bankers, in the wake of receiving a $185 million fine from regulatory agencies including the Consumer Financial Protection Bureau. More than 5,000 staffers have been fired since 2011 after it was revealed they opened 1.5 million deposit accounts and 565,000 credit cards Wells Fargo could not determine were ever authorized by users.
There is no indication that any other big banks have opened unwanted consumer accounts. However, virtually every major financial institution ties a portion of retail bankers' compensation to sales goals — for now, at least.
"All the banks do it, I don't know of any bank that doesn't do it," said Dick Bove, vice president of equity research at Rafferty Capital, said of sales goals for retail banking employees. "If there is one bank that isn't doing it, it's a badly run institution."