BUSINESS

Wells Fargo's New CEO Already Sounding A Little Stressed

He hasn't even had the job for a week yet.
Newly-minted Wells Fargo CEO Timothy J. Sloan, long the heir apparent to the bank's top spot, probably didn't expect this for
Newly-minted Wells Fargo CEO Timothy J. Sloan, long the heir apparent to the bank's top spot, probably didn't expect this for his coronation. 

NEW YORK ― On Friday, Wells Fargo went on the defensive during its first earnings call since admitting last month to scamming customers by opening accounts in their names. 

During the nearly 90-minute call, newly minted CEO Timothy J. Sloan offered few details about how the banking giant planned to change its ways. He repeatedly avoided answering questions about the scandal by citing an ongoing probe by independent investigators hired by the board of directors. 

“We want to be very respectful of their process,” said Sloan, who was promoted just 48 hours earlier, after the sudden departure of his predecessor, John Stumpf. “We want that process to be taken seriously and to be viewed independently. I don’t want to comment on the specifics about how they’re going to go about their review.” 

He repeated a version of that answer multiple times, despite saying he did not know whether the board planned to publicly release the findings of the investigation. 

Some financial analysts on the call weren’t having it. 

“We can’t ask who knew what and when, we can’t ask why it took so long to stop the problem,” said Mike Mayo, a banking analyst at brokerage giant CLSA. “Can you give us something concrete that relates to all of this?”

Sloan, audibly irritated, shot back: “I’m sorry we’ve disappointed you, but we’ve just spent 30 minutes talking about what’s going on at the company, and we’ve provided a lot of information.”

“We deliberately and diligently walked through the performance of all our businesses,” he added. “If that doesn’t satisfy you, I’m sorry.”

Wells Fargo's stock price fell slightly after the Friday morning earnings call. 
Wells Fargo's stock price fell slightly after the Friday morning earnings call. 

Sloan also deflected questions about negative press reports on the company.

“I don’t mean to be disrespectful to the media, but I don’t know if they have all the facts,” he said. “The review will look at all the facts and will make some recommendations, for sure.” 

Last month, the San Francisco-based bank, the country’s third-largest by assets, fired at least 5,300 retail employees it blamed for meeting unattainable sales goals by opening up to 2 million checking accounts without customers’ knowledge. During the call, Sloan said the company planned to find ways to retain its remaining workers.

“Saying that we put our team members through the ringer is an understatement,” he said, echoing the wording of an analyst’s question. 

“We’ve got to re-recruit our team in this kind of environment,” he added. “All ideas are on the table.” 

Sloan, a 29-year veteran of the bank who had not previously worked in the scandal-struck retail division, took over on Wednesday after serving for less than a year as chief operating offer. The 56-year-old was widely seen as being groomed for the top spot.

But Stumpf’s sudden departure on Wednesday ― billed as an early retirement ― hastened the process after the 63-year-old took the fall for a scandal that has already cost the company $190 million in settlement fees. 

During congressional hearings last month, Sen. Elizabeth Warren (D-Mass.) repeatedly skewered Stumpf, calling for him to resign and be “criminally investigated.”

The bank ultimately clawed back Stumpf’s $41 million in unvested stock, forced him to give up his $2.8 million annual salary and denied him any bonus. Stumpf, who had been with the company 34 years, still has a retirement fund worth $134 million, allowing him to pull in $3.6 million a year if he lives to age 100 ― and that’s before investment income or inflation are taken into account, USA Today reported. 

“Wells Fargo is going to be different five years from now, 10 years from now, 15 years,” Sloan said. “By changing and adapting to the environment, that’s one of the reasons we’ve had a history of success.”

Still, he admitted, “The last month or so has been a real challenge.”

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