Wells Fargo has hired an outsider to clean up its broken culture, three years after a reputation-tarnishing series of scandals erupted.
The bank on Friday named Charles Scharf, previously the CEO of Bank of New York Mellon and Visa, to become its new boss.
Wall Street, yearning for stability at a bank with annual revenue close to $65 billion, sent shares of Wells Fargo up almost 3% before the opening bell.
Scharf will take over for C. Allen Parker, who has led the San Francisco bank since March after its second CEO stepped down in quick succession.
Parker will remain in place until Scharf joins the bank on Oct. 21.
The hiring of Scharf ends Wells Fargo’s six-month struggle to find a replacement for Tim Sloan, who stepped down abruptly in late March.
“I am honored and energized by the opportunity to assume leadership of this great institution, which is important to our financial system and in the midst of fundamental change,” Scharf said in a statement.
“I have deep respect for all the work that has taken place to transform Wells Fargo, and I look forward to working closely with the board, members of the management team, and team members. I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities.”
In the announcement, Wells Fargo Board Chair Betsy Duke praised Scharf.
“Charlie is a proven leader and an experienced CEO who has excelled at strategic leadership and execution and is well-positioned to lead Wells Fargo’s continued transformation,” she said.
“With more than 24 years in leadership roles in the banking and payments industries, including as CEO of Visa Inc. and Bank of New York Mellon, Charlie has demonstrated a strong track record in initiating and leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape. Charlie’s financial and business acumen, integrity, passion for diversity and inclusion, and commitment to strong talent management are important qualities considered by our board’s search committee.”
The backstory
The company been involved in a series of scandals starting in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas.
That led to the resignation of CEO John Stumpf in October 2016. Last year, the Federal Reserve capped the size of Wells Fargo’s assets, and Stumpf’s replacement, Tim Sloan stepped down after what many considered a poor performance defending the bank in front of Congress in March.
In June Wells Fargo & Co. announced that it agreed to pay at least $385 million to settle a California lawsuit alleging it signed up thousands of auto loan customers for costly car insurance without their consent, resulting in many having their vehicles repossessed. The 2017 class-action lawsuit alleged that for more than a decade, Wells Fargo tacked on insurance to customers’ car loans that they didn’t need because they had private insurance. The bank acknowledged in 2017 that $80 million in unnecessary insurance charges had been added to 800,000 auto loans.
Federal regulators who lost patience with Wells Fargo’s continued bad behavior inflicted harsh punishments. Wells had to pay a $1 billion fine last year to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. But more importantly, the Federal Reserve stepped in and handcuffed Wells’ ability to grow its business until the bank could prove that it had gotten its house in order.
Scharf is a Microsoft Corp. board member and previously served as CEO of Visa Inc.
