(Reuters) -S&P Global ( SPGI ) upgraded its outlook on Wells Fargo ( WFC ) to "positive" from "stable", the ratings provider said on Friday, after the U.S. bank was released from a $1.95 trillion asset cap earlier this week.

The U.S. Federal Reserve's unprecedented, seven-year long punitive measure was imposed on Wells in 2018 and restricted balance sheet growth so the bank could address rampant governance and compliance concerns that had been brought to light in a fake accounts scandal in 2016.

The Fed's unanimous decision on Tuesday capped years of efforts by the bank to repair the damage and pay off billions of dollars in fines, sending Wells Fargo ( WFC ) shares to a three-month high a day later. The stock has gained nearly 8.3% in a year where the benchmark S&P 500 has remained flat.

"The positive outlook on the holding company reflects our view that Wells Fargo ( WFC ) has substantially improved its underlying governance, risk, and control profile, allowing for the removal of the Fed's asset cap," said S&P.

S&P also expects Wells to expand its commercial and investment banking business, "the unit most affected by the asset cap and one that had to turn away some nonoperational deposits from customers."

While the fourth-largest U.S. lender was forced to carefully manage wholesale deposits and its markets business, assets of peer JPMorgan Chase ( JPM ) swelled by nearly $2 trillion since the start of 2018, while those of Bank of America and PNC Financial added about $1 trillion and nearly $200 billion, respectively.

(Reporting by Ateev Bhandari in Bengaluru; Editing by Devika Syamnath)