Wells Fargo will stop issuing loans to the majority of its independent auto dealer customers, the company has confirmed.
People with knowledge of the situation state that Wells Fargo sent letters to hundreds of independent auto dealerships across the United States last month informing them that they were being dropped as a customer.
Wells Fargo spokeswoman Natalie Brown told CNBC the call was made in response to the coronavirus pandemic.
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“[Wells Fargo had] an obligation to review our business practices in light of the economic uncertainty presented by COVID-19 and have let the majority of our independent dealer customers know that we will suspend accepting applications from them,” Brown confirmed. “The independent dealers we will continue doing business with are those with deep, long-standing relationships with Wells Fargo.”
In April, the bank said it had set aside nearly $4 billion to cover expected loan losses during the pandemic.
Wells Fargo is operating under a dozen consent orders over its 2016 fake accounts scandal, including a limitation on the bank’s ability to grow its balance sheet until it fixes compliance shortcomings. This limitation hurt the bank recently as the pandemic prompted commercial clients to take billions of dollars in credit lines and loans.
The bank had grown its auto loan business to $48.6 billion at the end of March, making up its largest category of consumer loans after mortgages.
“Like lenders across the country, we are doing everything we can to help customers weather the economic impacts of this health crisis, including offering loan deferrals to customers who need them if they’ve been impacted by COVID-19,” Brown added.
