Wells Fargo (NYSE:WFC) is ending a popular consumer lending product, angering some of its customers.
Media reports out Friday morning quote customer letters as saying the bank is shutting down all existing personal lines of credit in coming weeks and has stopped offering the product.
The revolving credit lines, which typically let users borrow $3,000 to $100,000, were pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.
A six-page letter was quoted thus: “Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts.”
The move would let the bank focus on credit cards and personal loans, it said.
CEO Charles Scharf has been forced to make difficult decisions during the coronavirus pandemic, offloading assets and deposits and stepping back from some products because of limitations imposed by the Federal Reserve. In 2018, the Fed barred Wells Fargo from growing its balance sheet until it fixes compliance shortcomings revealed by the bank’s fake accounts scandal.
The asset cap has ultimately cost the bank billions of dollars in lost earnings, based on the balance sheet growth of rivals including JPMorgan Chase and Bank of America over the past three years.
It has also affected Wells Fargo’s customers: Last year, the lender told staff it was halting all new home equity lines of credit. Months later, the bank also withdrew from a segment of the auto lending business.
WFC shares gained 99 cents, or 2.3%, to $43.32.