Wells Fargo Sees $500 Million in New Overdraft Rule Hit

by Mercator Advisory Group 0

Wells Fargo, as one of thelargest financial institutions in the U.S., recently provided their guidance asto how the new era of financial regulation is going to impact their revenues ona go forward basis.

These announcementsare also the harbingers of how consumer and commercial financial servicesrelationships are going to be changing in the years to come.

We can expect to see less interaction withbank personnel, more self-service options, and new fee structures across marketsegments.

Wells Fargo & Cosaid new U.S. financial regulation to limit overdraft fees would reduce its feerevenue by about $500 million in the second half of this year.

The Federal Reservein November moved to ban overdraft fees on automated-teller-machines and debit-cardtransactions unless consumers had actively selected an overdraft protectionservice.

On July 21, theDodd-Frank Wall Street Reform and Consumer Protection Act became law. TheDodd-Frank Act reshapes and restructures the supervision and regulation of thefinancial services industry.

“We currentlyestimate that the combination of these changes will reduce our 2010 fee revenueby approximately $225 million (after tax) in third quarter 2010 and $275million in fourth quarter 2010,” the bank said in a filing with the U.S.Securities and Exchange Commission on Monday.

The bank said thatalthough the Dodd-Frank Act became generally effective in July, many of itsprovisions have extended implementation periods and delayed effective dates andwill require extensive rule making by regulatory authorities.

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