Incoming Wells Fargo CEO Charles Scharf has a long road ahead to fix the bank's regulatory woes, stemming from a scandal where up to 3.5 million unauthorized accounts were uncovered in late 2016, but he remains bullish on the outcome of that work.
Although he doesn't discount the company's issues, Scharf seemed confident in the bones of each line of business.
"The franchises are extraordinary, and the performance of the company over a long period of time was exceptional. That doesn't mean that the problems that came to light aren't real. They are very real, and the company recognizes that and is dealing with that," Scharf said.
He will take over Oct. 21, concluding a six-month search for a permanent CEO after Tim Sloan stepped down in late March. Former Wells Fargo general counsel, Allen Parker, was named interim CEO.
Despite Wells Fargo's headquarters being in San Francisco, Scharf will remain in New York, a top market for the bank and other large financial institutions. This summer, Wells Fargo moved its corporate and investment banking headquarters from midtown Manhattan to Hudson Yards, as part of a massive redevelopment project that will be completed in 2025. Wells is occupying 500,000 square feet in the 101-story 30 Hudson Yards office tower, investing more than $135 million to build out its new space.
Charlotte marks Wells Fargo's largest employment hub with more than 26,000 employees based in the Queen City. And Wells Fargo has managed to keep its top spot as the biggest bank in the Raleigh metro based its share of deposits in market.
Scharf said he is focused on dealing with the regulatory issues and creating the foundation for a better company moving forward.
Wells Fargo has operated under an asset cap since it entered into a consent order with the Federal Reserve System in February 2018. The bank has also refreshed many of its leadership positions and continues to look for ways to consolidate its processes. Regulators, however, remain unconvinced about Wells Fargo's progress toward redemption. Selecting an outsider to lead the company is seen as a way to appease regulators.
Betsy Duke, Wells Fargo board chairman, said choosing a permanent CEO shows regulators the bank has a solid, reliable plan for moving forward.
Duke thanked the CEO search committee for its "persistence" and "patience" in finding a leader over the last six months. She also praised Parker's work in keeping the company stable.
"Allen had the title of interim CEO, but he ran it as if he were the CEO for the long term. He never did anything in a temporary or short-term way," Duke said. "Allen has made sure that nobody put their pencils down. Everybody had eyes clearly focused on the work."
Some industry watchers speculated Parker would be given the permanent title. Other options included: Cathy Bessant, Bank of America Corp.'s chief operations and technology officer; Gordon Smith, chief operating officer at JPMorgan Chase & Co. (NYSE: JPM); and Gary Cohn, former president and COO at the Goldman Sachs Group Inc.
Scharf left his post as CEO of The Bank of New York Mellon Corp. (NYSE: BK) to take the Wells Fargo job. Prior to that, he was CEO of Visa Inc. (NYSE: V). Scharf also held top roles at JPMorgan Chase.
In Scharf's mind, the job at BNY Mellon would be the one to finish out his career. "I certainly didn't anticipate this opportunity coming along," he said.
His job now is to get to know the lines of business better and collaborate with management to position the company for the future. Scharf said, as with BNY Mellon and Visa, he plans to keep in close contact with the board as well. He views an engaged board with the members' different perspectives as a strength in running the company.
"I think about it like a partnership. You need to engage the entire company around a common set of goals, understandings, the way you want to do business," Scharf said.