WFC Wells Fargo and Company

By Emily Glazer 

Wells Fargo & Co. Chief Executive Timothy Sloan reiterated Tuesday that the bank expects to spend tens of millions of dollars to get through investigations and other regulatory matters related to its sales practices scandal.

"I think that seems reasonable today based on what we know," said Mr. Sloan, who became chief after former CEO John Stumpf retired abruptly in the wake of the scandal. "It's the upper end of our range from an efficiency standpoint."

Mr. Sloan, speaking at a Goldman Sachs financial-services conference, said the scandal could affect the firm's retail-banking results given changes in that business's incentive-compensation program. This is meant to refocus branch bankers from product sales to service, relationship growth and product referrals.

"There could be an impact," he said of the business. "You see that in fourth quarter numbers as we transition."

Mr. Sloan also said the scandal could affect the bank's submission next year for capital returns under the Federal Reserve's stress test and capital-planning process, responding to a question about so-called CCAR. He said reputational risk and customer remediation play into the bank's operating assumptions, but that Wells Fargo was "very conservative" in its submissions in the past.

"As we have stressed our capital plan for operating losses, we've included some pretty draconian scenarios that would encompass what we've seen today in terms of reputational risk and other related costs with retail sales practices," Mr. Sloan said.

On a more personal note, Mr. Sloan was asked at the conference if he is the right person to lead the bank through the aftermath of the scandal. Mr. Sloan responded that the bank has the "right leadership team in place."

Mr. Sloan said he has a unique perspective on the problems facing the bank given his 29 years at the firm paired with his willingness to have third parties examine different issues and be critical of practices. Mr. Sloan said two regulatory consent orders required the bank to bring in a consultant to look at sales practices in the retail business, but that he is having them look at every business "even though I'm not aware of any issues."

Mr. Sloan reiterated that there are parts of Wells Fargo's culture that need to change. In September, Wells Fargo agreed to a $185 million fine and enforcement action related to employees opening as many as 2.1 million accounts without customers' knowledge. That led to public outrage and congressional hearings. Numerous investigations into Wells Fargo, including by the Justice Department, are ongoing.

Write to Emily Glazer at emily.glazer@wsj.com

(END) Dow Jones Newswires

December 06, 2016 10:54 ET (15:54 GMT)

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