Wells Fargo & Co is seeking to sell its private-label credit card and point-of-sale (POS) financing unit as part of an ongoing strategic review of its businesses.
The banking group has started reaching out to possible bidders, but still hasn’t made a definitive decision as to whether it will actually sell the unit, which specializes in store-branded credit cards, according to a Bloomberg report.
Selling the private-label credit card unit would be a business reversal for the financial services group. In 2014, then-CFO John Shrewsberry told investors at a conference that the bank was looking to add to its private-label credit card business.
Bloomberg noted that although the private-label credit card market has grown to $191 billion, Wells Fargo still lags behind major players such as Synchrony Financial, Citigroup and Capital One Financial. A recent Nilson report estimated Wells Fargo’s share of private-label card spending at 5.75 percent in 2019 and its share of borrowings at 3.63 percent.
Wells Fargo has been mulling over whether to sell other units as well. Bloomberg said the bank had been gauging interest in its $607 billion asset manager unit and $10 billion student loan portfolio.
In mid-October, Wells Fargo reported markedly lower third-quarter earnings, but noted that credit card usage had climbed due to increased consumer spending. Credit card fees rose $912 million during the third quarter, up from $797 million in the second quarter.
Wells Fargo also reported heightened debit card usage. Debit card POS purchase volume hit $102.9 billion in the third quarter, up 11.1 percent from a year ago.
But unlike many of its competitors, Wells Fargo can’t offset the pain of low interest rates by ramping up lending activity, due to government sanctions that prevent the firm from growing its balance sheet.
“We won’t be expanding the size of our balance sheet for any reason, because we’re operating with an asset cap,” Shrewsberry explained to reporters during the earnings call. “Others are operating in a less constrained way.”
Shrewsberry recently stepped down as CFO of Wells Fargo, a move that was announced in July. He is succeeded by Mike Santomassimo.
Bloomberg reported in early October that Wells Fargo had eliminated more than 700 jobs in commercial banking, kicking off a series of cuts that could eventually number in the tens of thousands.
In September, Wells Fargo said it was launching a new, low-cost bank account — which also includes access to a new digital payments service — in its latest move to push beyond a series of scandals.