Wells Fargo chief forfeits $41m amid corruption probe

John Stumpf Image copyright AFP

Wells Fargo chief executive John Stumpf will forfeit $41m (£31.5m) in bonuses as the bank tries to deal with a scandal over its sales practices.

The bank is investigating how two million accounts were opened without customers' permission.

It said Mr Stumpf, who was paid $19.3m last year, would not receive a salary during the inquiry.

The former head of retail operations, Carrie Tolstedt, will forfeit $19m of bonuses and left without a payoff.

California, meanwhile. announced it was dropping Wells Fargo as its bond underwriter and broker-dealer because of the scandal.

The US state's sanctions against the bank will take effect immediately and remain in place for a year, said its officials.

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Media captionElizabeth Warren mauls 'gutless' Wells Fargo boss

"Wells Fargo's fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed," said California treasurer John Chiang.

The announcement comes ahead of Mr Stump's appearance before the House Financial Services Committee, scheduled for Thursday.

He is expected to face another tough questioning similar to his appearance before the Senate Banking Committee last week.

The bank said forfeiting bonuses and payoff did not mean there might not be more salary clawbacks from Mr Stumpf or Ms Tolstedt, depending on the results of the investigation.

"We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation," Stephen Sanger, Wells Fargo's lead independent director, said in a statement.

Earlier this month, Wells Fargo was fined $185m and accused of "widespread illegal practice" by the regulators.

Wells Fargo has fired more than 5,000 staff in response to the scandal. Mr Stumpf has so far ignored calls for him to step down.

'Deeply sorry'

During the hearing by a panel of US senators on 20 September, Mr Stumpf said he was "deeply sorry" for that and failing to act quickly.

"There is no question with some of our customers we violated trust," he said. "We never directed nor wanted our team members to provide products and services to our customers that they didn't want.

"That said, I accept full responsibility for all unethical sales practices," he added.

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During the questioning, Senator Elizabeth Warren, who has long been a critic of the US banking industry, was unmoved by his apology.

"You squeezed your employees to the breaking point so they would cheat customers,'' she said.

"You should resign. You should give back the money you took while the scam was going on," she added.

Record fine

Wells Fargo said it would be contacting every deposit customer across the country to see if their accounts were properly authorised.

It will also contact hundreds of thousands of customers with open credit cards to see if they want or need those cards.

In the future, confirmation emails will be sent to customers within one hour of the opening of a new deposit account.

The fine imposed on the bank by the US Consumer Financial Protection Bureau was the largest ever imposed by the regulator.

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