(Reuters) - Wells Fargo ( WFC ) shares rose more than 3% in premarket trading on Wednesday, after the U.S. Federal Reserve lifted a longstanding cap on its assets, marking a crucial milestone in the bank's push to rebuild its reputation.

The country's fourth-largest bank was operating under a $1.95-trillion asset cap mandated by the Fed in 2018 aimed at restricting its growth until regulators deemed it had fixed its problems dating back to the 2016 fake-accounts scandal.

The Fed board voted unanimously to lift the seven-year restriction, which was the first time the central bank had directly ordered a bank to stop growing in order to address widespread shortcomings.

"We expect the company to expand in a very controlled manner and within the same risk tolerance it has had," Barclays analysts said in a note.

"As such, we would expect incremental growth to linear over time, not exponential. This could be a multi-year journey."

The Fed's decision handed a major victory to Wells CEO Charlie Scharf, who had been navigating a maze of consent orders, legal battles and regulatory scrutiny since taking the top job in 2019.

During this time, peers thrived. JPMorgan Chase's assets grew by nearly $2 trillion since the start of 2018, while Bank of America expanded its assets by about $1 trillion.

Wells has said it wants to grow in areas such as credit cards, wealth management and commercial banking.

"A lifting of the asset cap combined with significant investments in many key businesses will drive earnings-per-share growth approaching 20% per year in 2026-2028," Deutsche Bank said.