Wells Fargo shares rose over 3% following reports that federal regulators are considering reducing the enhanced supplementary leverage ratio (eSLR) for large banks by up to 1.5 percentage points, potentially freeing up capital for Treasury securities trading. This news was further buoyed by Raymond James analyst David Long raising his price target on Wells Fargo to $84, citing the recent removal of the bank's asset cap as a catalyst for growth in assets, securities trading, and investment banking revenue.
Wells Fargo's shares (NYSE: WFC) experienced a notable uplift, climbing over 3% against a generally static market backdrop, driven by two key developments. Firstly, Bloomberg reported, citing undisclosed sources, that federal bank regulators including the Federal Reserve, FDIC, and the Office of the Comptroller of the Currency are considering a reduction in the enhanced supplementary leverage ratio (eSLR) by up to 1.5 percentage points, potentially lowering it to a range of 3.5% to 4.5%. This regulatory adjustment would free up capital for large lenders like Wells Fargo, potentially enhancing their capacity for trading in Treasury securities. Secondly, Raymond James analyst David Long reinforced a bullish outlook by raising his price target on WFC shares to $84 from a previous $78, while maintaining a strong buy recommendation. Long's positive reassessment is primarily attributed to the recent removal of the asset cap imposed on Wells Fargo by the Federal Reserve in 2018, which is now expected to allow the bank to grow its assets and benefit from increased securities trading and investment banking revenue. The article also implies an improved operational stance at Wells Fargo, suggesting a move towards more careful operations following the period that led to the asset cap.
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moderately positive
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