Wells Fargo's CEO Charlie Scharf gave a candid answer at the annual meeting this week to a frequently asked question: Why does it take so long to turn Wells Fargo around?
Wells (NYSE WFC) has been trying to recover from scandals which first surfaced in 2016, when the bank was hit with its first regulatory fines. The scandal involved fake accounts, where employees opened credit and deposit accounts without authorization in order to reach ambitious sales targets.
Scharf joined the bank as CEO in October 2019. He was hired to help it overcome its problems.
Scharf said that when he arrived at Wells Fargo, in 2019, the bank was not where he had expected it to be. Wells was facing a dozen public enforcement actions and notices by regulators stating that they needed to make changes. It took several months to fully understand the extent of the problems and what it would take to fix them.
Wells Fargo has now opened nine public enforcement actions. This shows just how far the bank has to go before it can turn things around.
Scharf also noted that the bank has restructured its senior leadership since his arrival, and several new executives have joined the bank's operational committee. These new leaders were required to create their own plans and assessments to deal with issues within their respective areas at the bank, as well as to build their own teams. Twelve of the 17 members of the operating committee are new employees at Wells Fargo and 15 have new roles. No member of the 17-member operating committee has been based at the bank's San Francisco headquarters since 1852.
Scharf stated that they were continuing to strengthen their leadership team and executing our strategic goals. We are focused on those businesses that can provide us with a return, despite the risk.
Mary Mack, the CEO of small and consumer banking, is retiring in the near future. Saul Van Beurden will succeed her next month as the head of technology at Wells. He joined Wells from JPMorgan Chase in 2019.
Scharf stated that Scharf's No. I'm often asked why our regulatory and risk work isn't complete.
Scharf stated that the work required to build an appropriate risk-control infrastructure and close consent order takes years when managed properly. He added that the decision on lifting the asset cap imposed by the Fed on the bank rests entirely with regulators.