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GOOD THINGS COME. Wells Fargo is U.S. finance’s biggest doer-upper. The $2.1 billion sale of its asset management unit on Tuesday shows the lumbering lender, still clawing its way back from a giant fake-accounts scandal, is at least moving forwards.
True, the price is equivalent to just 0.35% of the unit’s $603 billion assets under management, less than recent big asset management deals. Nor does it address Wells Fargo’s bigger problem: A ban from the Federal Reserve on getting bigger until boss Charlie Scharf can prove the lender has changed its ways.
That moment is getting closer, though. The Fed has in theory approved boss Scharf’s overhaul plan, Bloomberg reported last week. There’s plenty of ground to regain given Wells Fargo trades at less than half the forward price-to-book ratio of peer JPMorgan.
Scharf has an incentive to close the gap. His sign-on package of $44 million in stock is, on paper, worth just $35 million today. That’s a powerful motive to keep up the momentum, and the share price. (By John Foley)
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