John Stumpf is challenged over $13m stock sale before mis-selling scandal broke, and concedes some staff stole from customers

Earlier:

9.13pm BST

And finally.. the Dow Jones industrial average has closed with triple-figure losses, as worries over Deutsche Bank mount.

The Dow lost 195 points or 1.07% to finish at 18,143.

“When you look at what’s going on in the Deutsche Bank options, you’re seeing a lot of puts being bought,” said Daniel Deming, managing director at KKM Financial. “So you’re getting some concerns that this could turn into something bigger.”

Dow closes down triple digits after Deutsche Bank hits all-time low https://t.co/qyiOn4USWQ

6.23pm BST

So, why are any hedge funds taking money out of Deutsche Bank, when the bank insists it doesn’t need government support, and is adequately capitalised?

Chris Wheeler, a financial analyst with Atlantic Equities LLP in London, has told Bloomberg that “The issue here is now one of confidence,”

“That’s what’s going on here.

The thinking is ‘Deutsche Bank is fine, but there’s a slim chance it might not be, so why leave my money in there?’”

10-year yields tumble on the Deutsche Bank tumble https://t.co/EeSabCvLny pic.twitter.com/q9jxyHiSJg

6.06pm BST

The selloff is getting worse:

Market Alert: Dow falls 200 points as Deutsche Bank slides 7.8% https://t.co/YIjb6eMJof

5.58pm BST

Over on Wall Street, Deutsche Bank’s shares have just tumbled by 5%.

This is triggered by a Bloomberg report that around 10 hedge funds who clear derivatives trades with Deutsche Bank have cut their exposure by withdrawing some excess cash, and cutting positions held at the bank.

$DB https://t.co/28ceXhI8ax pic.twitter.com/NPC6U74O4U

“Our trading clients are amongst the world’s most sophisticated investors.

“We are confident that the vast majority of them have a full understanding of our stable financial position, the current macroeconomic environment, the litigation process in the U.S. and the progress we are making with our strategy.”

Some Deutsche Bank clients reduce collateral on trades https://t.co/44Iu0v7gwY pic.twitter.com/Q0IrxaJ6Ln

5.43pm BST

Back in the markets, the London stock market has closed at its highest level since mid-August.

The blue-chip FTSE 100 index gained 70 points, or 1%, to close at 6919.

While the news of a production cut is a welcome surprise, the deal will be treated with a degree of scepticism owing to the notoriously unreliable nature of OPEC discussions.

Most notably, the meeting goes to show that Saudi Arabia and Iran can work together, despite public spats between the two nations. Arguably despite this deal, supply will continue to outstrip demand, while US production will likely fill the gap with increased output as price rises. However, the key takeaway is that by ditching the market-based pricing mechanism of recent years, Saudi Arabia have re-established the relevance of OPEC, with the price of oil once more being manipulated by the world’s biggest cartel.

5.38pm BST

The House Committee now hear reports that Wells Fargo staff targeted African-American churches for false cross-selling, and referred to sub-prime loans as ghetto loans.

Stumpf says this would be totally unacceptable.

5.24pm BST

Could a dairy farmer find that he can’t get credit because his credit score has been ‘dinged’ by his bank opening accounts?

Stumpf confirms that this is how credit scores work.

5.20pm BST

This is a quality company that made some mistakes, pleads Stumpf as he faces more sustained criticism.

5.17pm BST

Both sides of the House committee are united in criticising Stumpf:

I’d score this hearing as being about 90% anger at Wells Fargo, 10% anger at regulators. Not good for Wells on a GOP-heavy panel.

5.15pm BST

Stumpf is asked about reports that staff were fired for whistleblowing about the problems at Wells Fargo.

We’re taking that very seriously, he replies. We have a ‘non-retaliation’ policy.

5.09pm BST

Quote of the day:

Cleaver turns @SenWarren into a verb. To Stumpf: you’ve already been Warrened so I’m not going to Warren you #WellsFargo

5.07pm BST

Incidentally, Public Citizen have produced a detailed guide into Wells Fargo’s cross-selling practices:

Cross-selling amounts to selling a new product to an existing customer. For example, if a customer only has a savings account with Wells Fargo, an employee may try to “cross-sell” that customer a checking, credit card, or other type of account.

According to Wells Fargo’s Chairman and CEO, John G. Stumpf, cross-selling “is the result of serving our customers extraordinarily well, understanding their financial needs and goals over their lifetimes, and ensuring we innovate our products, services, and channels so that we earn more of their business and help them succeed financially.”

5.03pm BST

Stumpf says there is no evidence that any ethnic group was disproportionately affected by the practice of creating fake accounts.

Asked if seniors were targeted, Stumpf says that young people actually suffered more.

4.55pm BST

John Stumpf is told to submit his resignation, rather than hang on because he has the board’s support.

Congressman Steve Pearce tells Stumpf that he failed to tackle the problems at Wells Fargo back in 2011 or 2013.

You have proved that you did not show leadership… I think you should submit a resignation.

4.47pm BST

Democratic congressman David Scott says he’s never seen such dreadful behaviour by a bank boss, misselling accounts to customers.

Stumpf insists he didn’t mis-sell these accounts personally, and is cleaning the affair up.

You should be downright ashamed of yourself, and you should apologies…. for the rancid example that you are setting, and the damage that you have done to the banking industry.

4.42pm BST

Stumpf is asked whether he understands the damage that Wells Fargo has done to the industry.

Stumpf replies that he grew up on a small farm, and understands proper values.

4.41pm BST

Democratic member Gregory Meeks spoke for many critics, telling John Stumpf that Wells Fargo was a “criminal enterprise”, that has “given the entire financial services industry a black eye.”

4.35pm BST

And now, the House committee moves onto exactly why Wells Fargo urged its staff to cross-sell eight financial products to each customer.

4.30pm BST

Democratic member Mike Capuano compares Stumpf and his board to a bank robber who recently stole from a Wells branch.

At the least, you’re guilty of conspiracy to commit fraud, conspiracy to commit identity theft…..and at least another dozen crimes, Capuano declares.

4.24pm BST

Republican Sean Duffy then lays into Stumpf, for not stopping the account mis-selling scandal earlier.

Duffy says Wells Fargo fired 1000 people in one year, another thousand the next, without the problem being stopped.

If any bank in my community were stealing from people, then we’d fire and fix the problem.

I think Wells Fargo was making a lot of money out of what you were doing, and you were hoping you wouldn’t get caught.

4.17pm BST

John Stumpf is now accused of putting unsustainable pressure on workers, by “bragging” about the amount of new bank accounts, credit cards, etc that Wells Fargo was “cross-selling” to customers.

Congressman Brad Sherman says:

“You fired 5,300 people, you took 5,300 good Americans and turned them into felons with a system that you created, benefited from and drove your stock price up by bragging about your levels of new accounts.”

Brad Sherman makes a good point. How can Wells CEO say the fraud on cross-selling wasn’t material when he bragged to investors about it?

Rep. Blaine Luetkemeyer: “There’s so much blame to go around on this, it’s unbelievable.”

4.00pm BST

John Stumpf also tells the House committee that Wells Fargo is working on a new sales incentive scheme, and fully reviewing its control practices, going back several years.

#WellsFargo tells lawmakers it’s going back to 2009 in search of roots of scandal. @AP reports. https://t.co/pttmQaWUTD

I know you’re not aware of this, but it’s very hard for someone to live in this country with a $25,000 salary.

3.53pm BST

The CEO of Wells Fargo, John Stumpf, has returned to Capitol Hill for a second grilling.

Maloney tells Stumpf: it’s suspicious he sold some of his stock after Wells Fargo was “turned into a school for scoundrels”

3.32pm BST

Back in Frankfurt, Commerzbank’s shares have fallen by over 2% after it announced 9,600 job cuts and a dividend freeze.

But the flurry around Deutsche Bank has calmed a little. Its shares are up 0.7% today, after the Berlin government insisted yesterday that it isn’t drawing up a rescue plan.

According to reports, Deutsche has set aside €5.5bn for potential fines and legal costs related to its ongoing discussions with the US Department of Justice.

Given leaks the DoJ is seeking a much higher fine – in the order of €14bn – that means the banks maximum capital loss would be around €8.5bn. But Deutsche has approximately €12bn of “Cocos” – financial instruments that are designed to be converted to shares if the bank were to enter a formal resolution procedure or undergo a precautionary recapitalisation. As such, these should easily cover any capital shortfall and obviate the need for taxpayer money from Berlin.

3.09pm BST

More American data just hit the wires, but this is less positive than the growth figures.

The number of contracts signed to buy a US home dipped by 2.4% last month, down to the lowest level since January.

In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings.”

BREAKING: Pending home sales fall 2.4% in third straight drop https://t.co/ExpQGE6GXO

3.01pm BST

Energy analyst Joe McMonigle of The Abraham Group suggests Opec’s deal is looking less impressive, now the various hurdles have been examined:

BREAK GLASS IN CASE OF EMERGENCY: After hyping expectations on freeze deal, OPEC punts to try for a revised “production target” in November.

OPEC hopes market will view deal to try for a future deal is a deal. But prices & sentiment slipping on closer look at the shaky strategy.

Saudi Minister: Iran, Nigeria & Libya could produce “at maximum levels that make sense” -a potential 1 mbd leaky hole in production ceiling.

2.49pm BST

This muted reaction on Wall Street shows that Opec’s deal isn’t a major shift for global oil market (yet, anyway).

But it’s still a start. as Sebastien Marlier, commodities analyst at the Economist Intelligence Unit, explains:

Given how divided OPEC members appeared only a few days ago, this joint agreement is a victory for the group. The pain caused by two years of low oil prices has prompted the cartel’s members to look past their differences.

But uncertainties abound and a much clearer message will be needed in November if prices are to move decisively higher.

After yesterday’s #OPEC deal, here’s a reminder of who contributes what. Based on our August monthly survey #OOTT @AlexLawler100 pic.twitter.com/9jOa5xRdeS

2.36pm BST

Over in New York, Wall Street has just opened for business with the usual bell-ringing and confetti.

Shares are dipping a little, with the Dow Jones down 0.1% or 17 points at 18,321.

2.30pm BST

The London stock market hasn’t been moved by the flurry of data from the US and Germany.

Related: Capita’s shares crash after Brexit woes prompt shock profit warning

“Check out post-referendum performance of Mitie (warned), Capita (warned) and Babcock. Different underlying businesses and Babcock is well run we think, but similar in that they all depend on customers renewing long term contracts.

And on that front, the common theme emerging from the two warnings is that amidst Brexit uncertainty UK businesses are delaying decision-making on long term spending. That could have a meaningful impact on earnings momentum for support services companies with a mostly UK client base. And Babcock may be experiencing the same.”

2.00pm BST

The number of Americans filing new unemployment benefit claims rose by 3,000 last month, to 254,000.

That’s still comfortably below the 300,000 mark, which denotes a healthy economy.

1st time unemployment claims at 254,000. “This marks 82 consecutive weeks of initial claims below 300,000, the longest streak since 1970”

1.42pm BST

Another newsflash: America’s economy grew faster than first thought in the second quarter of 2016.

*U.S. ECONOMY GREW 1.4% IN SECOND QUARTER, REVISED FROM 1.1%

1.23pm BST

Just in.. Prices in Germany have risen at the fastest pace since May 2015.

The annual Consumer Prices index has risen to 0.7% this month, up from 0.4% in August. Energy prices were less of a drag on inflation, while food, services and rental costs all rose.

German inflation accelerated more than expected. Sep CPI rose 0.1% MoM vs flat line number of 0.0% exp. CPI YoY at 0.7%, up from 0.4% in Aug pic.twitter.com/Z9purOuw1w

1.02pm BST

Brent crude is still declining to rally today, having surged last when the Opec deal came.

“OPEC’s agreement to cut production came as a complete surprise to markets last night, but it’s interesting that Brent has failed to breach the $50/barrel level that has acted as resistance in recent months…

It appears that market participants remain sceptical of OPEC’s mettle, and if the cuts announced will be sufficient to clear the current supply glut in crude.”

12.41pm BST

Capital Economics are also in the sceptical camp.

They have issued a note called “OPEC deal not a game-changer for oil markets”, which questions whether output will really be cut at all.

12.33pm BST

The Financial Times explains how disagreements between Iran and Saudi Arabia could knock the Opec deal off course:

Delegates from Iran say they have secured a production number close to 4m barrels a day — their stated post-sanctions target — and representatives from Gulf countries say there is an expectation that Iran caps production at this level.

However, that is not yet set in stone and negotiations are still ongoing. With Saudi and Iran still fighting proxy battles from Yemen to Syria, renewed disagreement before Vienna cannot be ruled out.

12.17pm BST

Energy journalist Ben Winkley has been tracking analyst reaction to the Opec deal, and found plenty of scepticism.

Here’s a flavour:

Barclays: Opec’s deal is a face-saving measure that they hope will keep a floor on oil prices until the next demand season arrives.

UBS: The difficult challenge of allocating quotas by country and an implementation date
remain.

Citi: look deeper and Opec’s deal becomes less and less meaningful, and more and more rhetorical.

11.48am BST

The boss of Swiss bank UBS has warned it could start charging more customers for banking services, due to the impact of negative rates.

UBS has already upped fees for corporate and institutional clients as well as raising mortgage rates by 50 basis points and accepting a smaller share of the market, but Ermotti cautioned this might not be enough if negative rates persisted.

“We may need to start to think about how to pass more negative rates to a broader client base than being able to reprice the asset side of the equation,” Ermotti said at a Bank of America Merrill Lynch conference in London.

11.18am BST

Should people worry that the oil price is going to spike, pushing up transport and heating costs?

Marino Valensise, head of multi-asset at Barings, says not, and sees a ceiling at around $60 per barrel.

Low prices mean budgetary challenges for a lot of oil producers, hence the cuts we’ve seen today. Once confirmed, one might expect that the oil price could go higher, but the cap that we see on the price of oil is between USD $55 and USD $60.

At those levels, share producers in the States will inevitably increase production and there will be no potential through that price level. That price level is coming down by the day because the cost of extraction in the US is going down a couple of dollars per year as technology improves.

11.04am BST

This graph, from energy analyst John Kemp, puts Opec’s production cut into context:

OPEC STATEMENT: Output cut, freeze or restrained growth? Depends what baseline is used for comparison: https://t.co/nrwjOR2n3I pic.twitter.com/yPfYjVc2yJ

10.47am BST

Britain’s financial watchdog, the FCA, has charged a former portfolio manager at asset management group Blackrock with insider trading.

Mark Alexander Lyttleton faces three counts of insider dealing, relating to “trading in equities and a call option between 2 October 2011 and 16 December 2011.” More here.

10.40am BST

Optimism within the eurozone has risen this month, according to the European Commission’s latest data.

10.26am BST

Energy companies are still rallying strongly in London, thanks to the Opec news.

Royal Dutch Shell (the largest company on the Footsie) and BT (5th largest) have driven the market up.

Expectations of a bigger cut to oil output later on in the year, ideally with Saudi Arabia and Russia, the two biggest players, doing their bit, could see oil reverse its traditionally weak performance in the fourth quarter and push higher.

It turns out that OPEC members can agree, and no doubt oil companies and their investors will be hoping that this outbreak of amity continues into the end of 2016.

10.13am BST

The oil price continues to dip as traders wonder if Opec will really cut production in November.

Brent crude is now down 1.1% at $48.15 per barrel, so still clinging onto most of last night’s 6% jump.

Even if it is a good news for oil prices, this is just a pre-agreement in which OPEC members agree to trim production without actually specifying who will take the cut or how it will be divided.

Therefore, we remain cautious concerning the effects of an actual trim in production, especially in view of the OPEC’s history of consistently failing to reach a consensus.

#Oil demand has barely improved this year, maybe this is why OPEC finally seemed to agree on something yesterday… pic.twitter.com/NHLfp3GNFA

9.53am BST

Commerzbank, Germany’s second largest bank, has announced plans to cut 9,600 jobs in a restructuring plan.

Last year Deutsche announced 25,000 job losses, 4,000 in Germany, and now Commerzbank announcing nearly 10,000.

9.35am BST

Newsflash: The number of mortgage loans granted in the UK has hit its lowest level in 21 months, down by almost 900 to 60,058 in August.

British mortgage approvals fell to their lowest level since November 2014 last month as the housing market continued to slow after June’s vote to leave the European Union, Bank of England data showed on Thursday.

But the BoE figures also showed lending to consumers continued to grow rapidly, expanding at a rate close to the 10-year highs seen in previous months.

9.30am BST

More City reaction to the Opec agreement:

#OPEC agreement might boost #oil prices in coming months but ultimately #US shale will cap the upside.

OPEC oil production capped at 33m bbl/day and in August OPEC produced 33.2m. Doesn’t seem like much of a cut more of a freeze!

OPEC’s cheered up all sorts of people up (producers, global risk sentiment, bond and yen bears to name a few). All we need are few details..

Surprised at #OPEC deal but also sceptical it amounts to much. No details until November, and only small cut from high base. May not happen

9.29am BST

Bloomberg have a good explanation about Saudi Arabia’s decision to cut output to push prices higher.

They point out that the kingdom’s oil minister, Khalid Al-Falih, has reversed his predecessor’s policy of letting the market set the oil without interference.

In 2014, when Saudi Arabia led OPEC’s pump-at-will policy, Riyadh calculated that if it reduced output, prices wouldn’t rise enough to compensate. This time is different.

“Saudi Arabia is betting that a small cut will pay for itself through higher oil prices and hence higher revenues,” said Jamie Webster, a fellow at the Center on Global Energy Policy at Columbia University in New York.

9.26am BST

Another interesting chart, from Morgan Stanley, showing how Opec can struggle to stick to its production targets (the blue line):

MS: #Opec Intervention Not As Good As It Sounds as there is a history of cheating. pic.twitter.com/sLcudBR2Qf

9.18am BST

Goldman Sachs aren’t terribly impressed with the Opec deal either, and aren’t changing their oil price forecasts.

Goldman analysts still expect US crude oil (or West Texas Intermediate (WTI) ) to hover around $43 a barrel for the end of this year and $53 a barrel in 2017.

“If this proposed cut is strictly enforced and supports prices, we would expect it to prove self-defeating medium term with a large drilling response around the world.”

“Compliance to quotas is historically poor, especially when oil demand is not weak.”

Goldman Sachs: OPEC oil deal doesn’t change our price outlook https://t.co/SfAtbsyHQP

9.10am BST

Just in… Germany’s unemployment rate remains at a healthy 6.1% this month.

#VDMA report #German #engineering orders rose 2% y/y in Aug; domestic orders up 8% y/y; foreign down 1% y/y. Orders down 5% y/y for Jun-Aug

9.03am BST

This chart shows how many Opec members are pumping at almost maximum capacity, as they try to pull in as much revenue as possible.

OPEC reaches consensus on output cuts for the first time since 2008 but clinching a deal is far from certain https://t.co/IpM4Od8aNy pic.twitter.com/FkqakbQJDU

There is also no guarantee that a cut triggers a meaningful increase in price of course. Nigeria is looking to bring on around a million barrels per day soon – roughly what analysts expect will be the sum total of these cuts – whilst you had better believe that shale operators in the US and elsewhere will be looking forward to getting their wild cat operations.

9.02am BST

Marc Ostwald, analyst at ADM Investor Services, is also a little sceptical, telling clients:

There is of course the OPEC ‘production deal’ to digest, which it has to be said looks to be of the ‘we must agree something, however vague and lacking in specific detail’, with the fear that downward seasonal pressures would send oil prices into a renewed downward spiral the clear motivating factor.

8.51am BST

Interestingly, the oil price is now dipping a little, having surged late last night.

A committee has been set up to deal with that [who freezes production] and is likely to be a tall order if history is any guide. Ultimately the proof of the pudding will be in the eating and if history is any judge, the detail will fall short.

If anything this looks like another attempt to keep a floor under prices without actually having to do anything. For now it seems to be working, the ultimate in jaw-jaw.

8.44am BST

Setting Capita’s woes aside, European stock markets are all rallying as investors move money into riskier assets.

The positive open come almost entirely courtesy of last night’s surprise OPEC production cut agreement.

The news sent oil prices sharply higher and has helped Energy names overnight while buoying sentiment in the general commodity space.

8.36am BST

Shares in Capita, the outsourcing and professional services group, have plunged by 22% at the start of trading.

The company has issued a profits warning this morning, saying that clients have been delaying spending decisions following the UK’s vote to leave the EU in June.

Our performance in the second half of the year to date has been below expectations, as a result of a slow-down in specific trading businesses, one-off costs incurred on the Transport for London (TfL) congestion charging contract and continued delays in client decision making.

8.14am BST

Shares in major oil producers have jumped at the start of trading in London.

Royal Dutch Shell are up 5%, with BP gaining 4.3%.

8.06am BST

The big surprise is that Saudi Arabia has reversed its approach to managing the oil market.

“They are hoping to turn around a world where they were trying to work the price down and keep new producers out, to a new world where they can wok the price up again.”

“The big takeaway is how into a corner the Saudis have backed themselves.

This whole plan has backfired on them. They’re going to be bearing most of the cutback if they pull it off, and they’ve had to really kowtow to the Iranians in this whole thing.”

7.55am BST

It appears that Iran won’t actually cut production itself, but will rein in its ambitions.

Associated Press reports:

According to Wednesday’s deal, Iran will be allowed to increase production to 3.7 million barrels a day, according to Algerian participants at the meeting. It is currently estimated to be pumping around 3.6 million but had been aiming for 4 million per day.

7.48am BST

Stock markets in Asia have jumped on the back of Opec’s surprise deal to cut output, even though details are limited.

Japan’s Nikkei led the way, jumping by nearly 1.4%. A higher oil price would please Japanese policymakers, as they strive for higher inflation.

Battered finances of major oil producing countries forced the leaders to put their differences to one side and end a 2-year unofficial war on shale. Crude prices surged by 6% following yesterday’s news and sent Asian equities higher with energy stocks leading the rally.

Such a deal should have had a stronger impact on oil, I would say at least a 10-15% rally, but the limited details of the agreement put a limit on the upside and we will now have to wait until November 30 to see whether the agreement will translate into actions, and whether non-OPEC oil producers will follow suit.

7.34am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

“We have decided to decrease production by around 700,000 barrels per day.

After reaching its group target, it will seek support from non-member oil producers to further ease the global glut.

Brent crude settled up $2.72, or 5.9%, at $48.69 a barrel, hitting a more than two-week high of $48.96. US West Texas Intermediate (WTI) crude rose by $2.38, or 5.3%, to settle at $47.05, after a peak $47.45, its highest since 8 September.

Related: Oil prices rise 6% after Opec agrees to limit crude output

“This is a historic deal. This is the first time Opec and non-Opec will agree together in over a decade. This should put a floor on oil and should see oil move back toward the $60s.”

#OPEC boost to equities – #Europe looking for a stronger start. pic.twitter.com/MbCCcVW7Pz

Related: Europe’s banks ‘not investable’ says top banker amid Deutsche Bank crisis

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