Wells Fargo’s (WFC) fake accounts and fees scandal has toppled it from its perch as the world’s largest bank by market capitalization.
Fargo shares continued to fall in Wednesday trading, bringing its overall market value down to about $228 billion—more than a $9 billion loss in value. That lifted competitor JPMorgan Chase (JPM) to the top spot with an approximate $10 billion market cap advantage over its rival. Fargo’s stock has plunged 7.75% since last Thursday.
Last week’s revelations that Fargo employees created millions of fake customer accounts to collect fees and meet sales targets has been met with an avalanche of criticism and mounting consequences for the banking giant. CEO John Stumpf has been called on to testify about the scandal in front of the Senate Banking Committee, and the company told call center employees to scale back on cross-selling products and services not specifically requested by customers.
Wells Fargo announced the firing of more than 5,300 employees involved in creating fake accounts after the record $185 million Consumer Financial Protection Bureau (CFPB) fine levied against the firm last week, and has pledged to investigate any others who may have been involved.
But the bank has also stressed that the bad behavior is mostly attributable to relatively low-performing workers who used desperate tactics to boost their sales numbers. Still, Wall Street analysts such as Piper Jaffray’s Kevin Barker have argued that Fargo’s decision to move towards nixing sales targets “could materially change how the company’s retail banking segment operates,” as FT reports, and have a much bigger effect on the firm’s finances than the CFPB fine.