Wells Fargo jumps as the bank reportedly gets Federal Reserve approval for overhaul plan

• Wells Fargo stock hit a high for 2021 after a Bloomberg report about the lender's overhaul plan.
• Federal Reserve officials have privately signaled acceptance of a plan to revamp risk management and governance.
• Wells Fargo wants the Fed to remove an asset cap that was imposed following scandals tied to internal controls.

Wells Fargo stock surged to its highest point in 2021 on Wednesday following a report the Federal Reserve has indicated approval for the bank's overhaul plan, keeping the company on course to have an asset cap removed.

Officials at the central bank have privately signaled their acceptance of the company's proposal for revamping risk management and governance, Bloomberg reported, citing unnamed people with knowledge of the matter.

Shares of Wells Fargo rose nearly 8% in hitting an intraday high of $37.45. The gain was later pared to about 5%. The stock has bounced up about 21% so far this year but was still down 23% over the past 12 months.

Fed approval of the overhaul plan would mark significant progress by the bank to address lapses that led to a number of scandals related to internal controls. In response to the lapses, the Fed in 2018 imposed an unprecedented cap on Wells Fargo's assets, limiting the bank's growth.

More steps remain for the asset cap to be removed, including the submission of a plan by Wells Fargo executives to fortify board effectiveness and risk management, according to the report.

Key Fed officials see the cap-removal process running into 2022 or beyond, Bloomberg reported in December.

Wells Fargo Chief Executive Charles Scharf was hired in 2019 in part to resolve the lender's issues including its regulatory growth restrictions.