Wells Fargo CEO says diversified model reduces concentration risk

Commenting on the company’s earnings call about the recent market events impacting the banking industry, Wells Fargo CEO Charlie Scharf said: "We believe banks of all sizes are an important part of our financial system as each is uniquely positioned to serve their customers and communities. It’s important to recognize that banks have different operating models and that the banks that failed in the first quarter were quite different from what people think of when they think about the typical regional bank. These particular banks had concentrated business models with heavy reliance on uninsured deposits. Our franchise and those of many other banks operate with a broader business model and more diversified funding sources. It is times like these that the many benefits of our own franchise become even more clear. Our diversified business model provides opportunities to serve our customers broadly, which reduces concentration risk across the different elements of risk… We also have strong capital and liquidity positions, which include a mix of deposits and access to multiple funding sources and our continued focus on financial and credit risk management allows us to support our customers throughout economic cycles." The firm’s CET1 ratio, "which was already strong," increased to 10.8% "even as we resumed common stock repurchases in the first quarter buying back $4 billion in common stock," Scharf added.