On Tuesday, after the bank account fraud incident, Wells Fargo announced its sales target for the termination of its retail banking products. The stock price fell by more than 3%, and its market value was surpassed by JPMorgan Chase. JPMorgan Chase has become the world's largest bank by market capitalization, with a scale of US$240.3 billion based on closing price. Apple, the world's largest company by market capitalization, currently has a market capitalization of US$582 billion.
In recent years, Wells Fargo has expanded rapidly, mainly due to the 2008 financial crisis. Wells Fargo has the highest loan volume in the United States. At the end of the first quarter of this year, Wells Fargo had $947 billion in loans of $1.85 trillion in assets. At the same time, loan loss rates are among the lowest among all major banks.
However, behind the gorgeous high loans, there are serious flaws in internal supervision. Last week, media reported that Wells Fargo had 1.5 million accounts and 565,000 credit cards that were counterfeit, and the bank would be fined $185 million for this.
On Tuesday, in order to appease regulators, lawmakers and customers after the bank account fraud incident, Wells Fargo announced its sales target for discontinuing its retail banking products and increased expenses by $50 million a year to review its sales strategy.
Affected by the above news, Wells Fargo's stock price fell by more than 3% on Tuesday. Although U.S. stocks fell sharply on the same day, with the S&P 500 index falling by 1.5% and JPMorgan Chase's stock price falling by 0.8%, Wells Fargo's excessive decline caused it to lose its position as the largest bank by market capitalization in the United States and even the world. Previously, Wells Fargo had been the largest bank in the United States by market capitalization since 2013.
Based on Tuesday's closing price, JPMorgan Chase's market value is approximately US$240.3 billion, and Wells Fargo's market value is approximately US$236.9 billion. Industrial and Commercial Bank of China is the third largest bank in the world by market capitalization. Due to China's stock market crash in 2015, ICBC's market value fell by about 20% from its peak. Looking at companies in various industries, the world's largest company by market value is Apple, with a market value of US$582 billion, and Google's parent company Alphabet is the second largest company by market value, with a scale of US$531 billion.
The chart below shows the stock price trend of Wells Fargo. Wells Fargo's drop on Tuesday may be its biggest since the Brexit referendum, marking the third consecutive day of losses for the stock.
After the market closed on Tuesday, Wells Fargo CEO John Stumpf said on CNBC that they were wrong. All Wells Fargo management should be responsible and he bears responsibility. Stumpf said he would continue to serve as CEO.
Wells Fargo is the favorite bank of stock investor Warren Buffett, who has invested in this bank since 1989. In March this year, Buffett and his company revealed that their holdings in Wells Fargo reached the regulatory threshold of 10%. Wells Fargo's losses on Tuesday reduced Buffett's fortune by $1.4 billion in one day.
