By Yuka Hayashi and Emily Glazer 

Wells Fargo & Co. is close to settling claims by federal regulators related to its risk management, involving a fine of as much as $1 billion, people familiar with the matter said.

The settlement with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency is expected to be announced as soon as Friday. It will detail the bank's failures to catch and prevent problems, including improper charges to consumers in its mortgage and auto-lending businesses, the people said.

The settlement also could include increased regulatory scrutiny of the bank's compensation to employees responsible for its sales practices, according to a person familiar with the matter.

Wells Fargo disclosed last week that the CFPB and the OCC had offered to the resolve civil investigations for $1 billion. The final terms of the settlement couldn't be determined.

The settlement would be another blow to Wells Fargo and follows an unprecedented enforcement action by the Federal Reserve in February that barred the bank from growing past the $1.95 trillion in assets it had at the end of 2017. The Fed cited "widespread consumer abuses" in its rebuke.

It also would far exceed a $185 million fine the two financial regulators and a city official imposed on Wells Fargo in 2016 after finding the San Francisco-based bank had opened as many as 3.5 million accounts without customers' knowledge or consent.

Wells Fargo has been under investigation by federal and state regulators across different businesses since the sales practices scandal erupted in 2016 . At the root of some of the problems is the bank's risk-management framework, which it has been changing in the past several months as regulators intensified their pressure.

The settlement would be the first major enforcement action by the OCC under the Trump administration and the first action by the CFPB since Trump-appointed officials took control of the agency in November, with its acting director Mick Mulvaney ordering a re-examination of the agency's regulations and enforcement cases.

President Donald Trump in December tweeted that Wells Fargo remained in the government's crosshairs. "I will cut Regs but make penalties severe when caught cheating!" Mr. Trump said in the tweet.

It isn't clear how the bank will account for the settlement in its finances, though it did say last week it may need to restate earnings because of the regulatory negotiations. The bank said it was "unable to predict the final resolution" of the OCC and CFPB matter and "cannot reasonably estimate our related loss contingency."

Chief Executive Timothy Sloan on a call with analysts on April 13 wouldn't say whether Wells Fargo had included any provisioning for the potential settlement in its first-quarter results. He said the bank likely would have updates on the negotiations in its quarterly securities filing that typically is disclosed a few weeks after it reports earnings.

The bank also has its annual shareholders meeting on April 24.

Banking regulators in mid-2017 downgraded one part of a secret assessment of Wells Fargo's health and strength related to its risk management, The Wall Street Journal reported in January.

The assessment -- known as a CAMELS score -- ranks a firm on measures including capital, management and liquidity. The scores can affect the level of insurance payments a bank must make as well as the level of regulatory oversight of a firm.

Wells Fargo and the OCC have negotiated for months over how the firm assesses risks and over a potential settlement, The Journal has reported. The OCC also sent the bank's board a letter in November about these issues.

The company in recent months hired a consultant to try to revamp its procedures and revisited structural changes made in response to the sales-practices scandal.

The bank also said its chief risk officer Mike Loughlin would retire and that it will hire someone to replace him in "the next few months." The bank hasn't named a replacement but has been interviewing outside candidates, people familiar with the process said.

In late January, Wells Fargo appointed former Federal Reserve Bank of New York official Sarah Dahlgren to oversee regulatory relations for its corporate risk group.

The Journal reported in March that four top risk management executives would be retiring from Wells Fargo in the coming weeks.

--Ryan Tracy contributed to this article.

Write to Yuka Hayashi at yuka.hayashi@wsj.com and Emily Glazer at emily.glazer@wsj.com

(END) Dow Jones Newswires

April 19, 2018 16:57 ET (20:57 GMT)