Wells Fargo Names Charles Scharf President, CEO--3rd Update
September 27 2019 - 10:44AM
Dow Jones News
By Rachel Louise Ensign
Wells Fargo & Co. named Bank of New York Mellon Corp. Chief
Executive Charles Scharf as its new CEO, ending a six-month search
for a leader capable of restoring the bank's battered reputation
and improving its standing with regulators.
Wells Fargo said Mr. Scharf will join the bank as president and
CEO on Oct. 21. He succeeds C. Allen Parker, Wells Fargo's general
counsel, who has been serving as interim chief since Timothy Sloan
resigned in late March.
Mr. Scharf spent four years as the CEO of Visa before taking the
BNY Mellon job in July 2017. Prior to joining Visa, he was a top
lieutenant to JPMorgan Chase & Co. CEO James Dimon and spent
seven years running the bank's sprawling consumer operation.
Wells Fargo shares rose about 5% following the announcement.
Mr. Scharf has a tough job ahead of him at Wells Fargo, which
has been struggling to right itself since a fake-account scandal
erupted at the bank three years ago. Atop the agenda is getting
back in the good graces of regulators, who have been unsatisfied
with its response to problems exposed by the sales scandal. The
bank's operations also have suffered.
He will tackle the challenge from afar. Mr. Scharf will remain
in New York but told investors on a call Friday morning that he
will make frequent trips to San Francisco, where Wells Fargo is
based, and Charlotte, N.C., where many of its employees work.
Mr. Scharf has experience with turnarounds. He was tasked with
overhauling BNY Mellon, a bank that handles much of Wall Street's
vital back-end work, such as tracking the value of securities. He
has slashed expenses but has been reluctant to set concrete targets
for the revamp. Revenue growth has been muted, and the stock has
fallen 9% in the past year.
Wells Fargo embarked on its own overhaul following the sales
scandal, reorganizing divisions and appointing new executives. Yet
problems continued to emerge throughout the bank over the past
three years. Nearly every one of its business lines is under
investigation by a government agency, including the Justice
Department and the Securities and Exchange Commission.
Wells Fargo enjoyed a sterling reputation as a bank that dodged
the worst abuses of the financial crisis until September 2016, when
it came to light that bank employees had opened potentially
millions of accounts without customer knowledge. Mr. Sloan, a Wells
Fargo veteran, took over as CEO at the height of the scandal,
following John Stumpf's resignation. By that point, the bank's
folksy image was in tatters.
Restoring it has proved difficult, especially where regulators
are concerned. In February 2018, the Federal Reserve took the
unprecedented step of capping the bank's growth, citing
risk-management deficiencies.
A few months later, the Consumer Financial Protection Bureau and
the Office of the Comptroller of the Currency imposed a $1 billion
fine on the bank for misconduct in its auto- and mortgage-lending
business. The OCC said it found risk-management deficiencies that
"constituted reckless, unsafe or unsound practices," leading to
improper charges to hundreds of thousands of consumers.
Regulators stepped up their pressure on the bank earlier this
year, leading to Mr. Sloan's resignation.
"I could not keep myself in a position where I was becoming a
distraction." Mr. Sloan said in a call with investors announcing
his resignation.
The search was the subject of intense speculation in the banking
business and beyond. Warren Buffett, whose Berkshire Hathaway Inc.
is Wells Fargo's largest shareholder, complicated the search when
he said the bank should avoid hiring someone with Wall Street
roots.
Wells Fargo's board focused on top executives at the biggest
banks and the CEOs of large regional lenders. In the first months
of the search, several top candidates told Wells Fargo they weren't
interested in the job.
Allison Prang and Justin Baer contributed to this article.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
September 27, 2019 10:29 ET (14:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Apr 2023 to Apr 2024