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Wells Fargo & Co said late Sunday that it will cap its participation in the U.S. government's small business coronavirus rescue program at $10 billion due to regulatory constraints.
The $350 billion loan program, which launched on Friday, will provide low-interest loans to help small businesses cover payroll and other fixed costs such as rent, mortgages and utilities over the next eight weeks.
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"While we are actively working to create balance sheet capacity to lend, we are limited in our ongoing ability to use our strong capital and liquidity position to extend additional credit," Chief Executive Charlie Scharf said in a statement.
The Federal Reserve in early 2018 ordered Wells Fargo to keep its assets below $1.95 trillion, until it had improved its governance and risk controls following a wave of sales practice scandals. The bank started 2020 with roughly $20 billion of room under the cap, according to filings.
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Wells Fargo, the fourth largest U.S. lender, has urged the U.S. Federal Reserve to lift the asset cap on the bank to help it support businesses and customers hit by economic fallout from the coronavirus outbreak, Reuters has reported. But so far regulators have been cold on the idea.
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"We are committed to helping our customers during these unprecedented and challenging times, but are restricted in our ability to serve as many customers as we would like," Scharf said.
The San Francisco-based lender said it has likely reached its $10 billion limit based on the applications it has already received, and will prioritize giving loans to non-profits and businesses with fewer than 50 employees. The bank will also give fees received from the program to non-profits focused on small business.
Small businesses, which employ about half of U.S. private sector employees, have been dramatically hurt by the coronavirus pandemic as states have halted non-essential businesses and consumers curb their spending.
Banks have been flooded with applications from clients looking for a piece of bailout fund.
Bank of America Corp, the first large bank to begin accepting applications on Friday morning, said it received 85,000 applications requesting $22 billion on the first day.
Wells Fargo opened its portal on Saturday.
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The bank said it was helping customers in other ways including deferring payments and waiving fees. Last month the bank deferred nearly $1.8 billion in payments and waved more than $28 million in fees for customers affected by the coronavirus recession.
(Reporting by Imani Moise; editing by Richard Pullin)