Despite those challenges — or perhaps because of them — Wells Fargo (WFC) has lavished shareholders with aggressive share buybacks. Wells Fargo shelled out $7.4 billion to repurchase its stock in the third quarter, nearly triple what it spent the year before. In the eight quarters since the fake-accounts scandal erupted in September 2016, Wells Fargo has spent an average of $3.2 billion each quarter on buybacks, according to a CNN Business review of company filings. That’s 45% above what the bank spent during the prior eight quarters. Wall Street loves buybacks because they create demand for stocks. And by removing shares from the market, buybacks artificially boost companies’ earnings per share. Wells Fargo’s stock is down 24% in the past year, and it probably would be suffering more if the bank wasn’t going so big on buybacks. “They can’t get new investors to buy the stock, so they’ll just get their own shareholders to do it,” said David Santschi, director of liquidity research at TrimTabs Investment Research. “They want to offset some of the loss of interest from the scandals.” The Wells Fargo buyback splurge is far ahead of the ramp-up among Corporate America more broadly. Over that same timeframe, S&P 500 quarterly buybacks have increased on average by 12%, according to data provided by Howard Silverblatt of S&P Dow Jones Indices. Brightest part of the Wells Fargo story Big banks are ramping up buybacks across the board. The Federal Reserve has blessed a more robust capital return strategy from many large banks, freeing them to return some of the cash they’ve built up since the 2008 crisis. S&P 500 financial sector quarterly buybacks, including those by Wells Fargo, rose by 34% over that time frame to $32 billion a quarter,
Wells Fargo has splurged on stock buybacks since fake-accounts scandal
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