The headlines keep getting worse for Wells Fargo in its fake account scandal, but the latest disclosures actually could represent a turning point.
Revelations on Thursday that some 3.5 million accounts were affected should constitute a full disclosure of the problem and allow the beleaguered bank to begin putting the scandal behind it, Keefe, Bruyette & Woods said in a note.
"The fact that the company has completed its comprehensive third-party account review and has communicated the finality of its customer remediation plans is a positive in our view," KBW analyst Brian Kleinhanzl said in a note. "The retail sales practice scandal settlement was announced nearly a year ago, and at this stage we now expect the trickle of new information to slow considerably."
Wells Fargo shares took a hit from the announcement, falling 0.8 percent by mid-Thursday afternoon. It's been a terrible year for the third-largest U.S. bank by assets, marked by a big reputational hit that has sent shares down about 7.6 percent year to date. By comparison, the KBW Nasdaq Bank Index is off about 1.2 percent in what has been a rough year for financials overall.
However, Kleinhanzl thinks Wells Fargo can begin to repair some of the damage. He noted that the bank already had gone public that there would be a further review that would show more accounts affected.