Wells Fargo said late Thursday that it will tap a new leader from outside the bank to take over from retiring President and CEO Tim Sloan. It outlined this and related steps being taken to move the organization beyond the fake-accounts scandal of the past few years on a call with equity analysts.
The news comes two and a half years after Sloan took the reins from the embattled John Stumpf, who led the bank while it opened several million fake accounts. “There’s been too much focus on me … and I felt I was becoming a distraction,” said Sloan.
Sloan is being replaced on an interim basis by Allen Parker, who has been general counsel for the past two years.
Also on the call, Betsy Duke, now chair of the bank and a former Federal Reserve governor, said “we have a lot more work to do” regarding the bank’s challenges. (It’s now operating under a Fed Reserve asset cap.) She added that a search committee for the CEO slot has been formed and is meeting for the first time Friday.
Other top executives on the call included Parker and Chief Financial Officer John Shrewsberry.
Over the past few weeks, the New York Post reported that former Goldman Sachs executives Harvey Schwartz and Gary Cohn have been approached to replace Sloan, which the bank has denied.
Wells Fargo leaders said Thursday that the bank is set to maintain two roles for the chairman and CEO. It also has tapped a new auditor, Julie Scammahorn, the ex-chief auditor of Citibank, and hired Saul Van Beurden, formerly chief information officer of consumer and community banking for Chase, to be its first head of technology.
Reactions to Sloan’s Departure
Politicians who had been calling for Sloan’s firing for some time were pleased with Thursday’s developments.
“About damn time,” tweeted Sen. Elizabeth Warren. “Tim Sloan should have been fired a long time ago. He enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up. Now — let’s make sure all the people hurt by Wells Fargo’s scams get the relief they’re owed.”
In a statement, Sen. Sherrod Brown echoed Warrren’s remarks: “Tim Sloan needed to go, and he should not take a huge payout with him. But Wells Fargo’s mismanagement is about more than one CEO — this bank needs a complete culture shift.
“Watchdogs cannot afford to let up on Wells Fargo and whoever is tapped as the new CEO must be ready to clean up the greed that has hurt millions of customers and workers,” he added.
Still, some rose to Sloan’s defense, such as Yale School of Management Senior Associate Dean Jeff Sonnenfeld, who said that Sloan had helped the bank produce some of the best earnings in its long history. “Why go after the fixer? Why not go after John Stumpf?” he asked on CNBC.
And Warren Buffett — the head of Berkshire Hathaway, one of the bank’s largest shareholders — said on CNBC that he supported Sloan “100%.”
Wells Fargo has 13,968 advisors, down nearly 600 from a year ago and over 100 from the prior quarter. Since the bank’s fake-accounts scandal erupted in the fall of 2016, when it had 15,086 registered reps, its wealth unit has lost 1,118 advisors.
— Check out A Timeline of Wells Fargo’s Scandals on ThinkAdvisor.