Wells Fargo expects to see its commercial real estate lending shrink as it copes with the fallout from its various scandals.
CFO John Shrewsberry said at a conference Friday that he expects commercial real estate and industrial loans to fall from their second-quarter levels, according to a report by New York real estate publication The Real Deal. Shrewsberry said the bank was exercising deliberate lending discipline, and also pointed to the current lending environment’s array of alternative funding sources as reasons for the drop.
However, the megabank is also dealing with the repercussions of its numerous scandals, which include the opening of millions of fake accounts and charging mortgage customers improper fees.
In the second quarter, the bank spent $171 million to compensate customers who were wrongly charged for currency trades, according to The Real Deal. The bank is also facing a Justice Department investigation into whether its wholesale unit employees committed fraud by adding information to customer documents without consent.
Wells Fargo’s total portfolio of outstanding loans shrank by $3 billion in the second quarter, according to The Real Deal.