- Wells Fargo’s management has changed significantly since CEO Charlie Scharf joined in 2019.
- Insider has tracked in the deepest detail yet how he overhauled leadership after years of scandal.
- Wells has hired many prominent executives from JPMorgan, Scharf’s longtime former firm.
Wells Fargo CEO Charlie Scharf has quietly transformed the upper ranks of the fourth-biggest US bank since joining in 2019.
Since the bank’s wide-ranging sales practices scandal first erupted in 2016, Wells has seen two CEOs resign and rounds of top leadership leave the bank. But Scharf, a one-time protege of JPMorgan’s Jamie Dimon and Wells’ first outsider CEO since the scandal broke, has been taking that to the next level.
“Our management team is fundamentally different today than what it was a year and a half ago,” he told analysts during a conference in May.
Four months into Scharf’s tenure in early 2020, Wells Fargo overhauled its internal reporting structure to more tightly control risk and promote accountability. On Scharf’s watch it has also sold parts of itself, like its asset management and corporate trust businesses, in an effort to cut costs and focus on core businesses like consumer banking.
Wells has now brought in nearly 90 executives from outside the bank since the beginning of 2019, replacing leaders in existing roles or creating new positions like those focused on risk management, an Insider analysis showed. More than half of the firm’s 18-person operating committee is new, with Scharf and 10 other members who are new to the company since fall 2019.
“We’re appropriately recognizing the great talent that exists here, but bringing people from the outside that have a different set of experiences which are additive, and I feel great about the team that we have in place today,” Scharf said in May.
Scharf has hired heavily from his past employers: JPMorgan, the largest US bank by assets, and Bank of New York Mellon, the largest custody bank.
“Typically if you’ve been in the industry a long time, you go with people you know, for obvious reasons,” Charles Elson, a finance professor at the University of Delaware, told Insider. “You have confidence in them, you know they can get the job done.”
He served as CFO of Bank One under longtime mentor Dimon until JPMorgan bought it in 2004. He was with JPMorgan for nine years, rising to run the bank’s retail operations. He then ran Visa for four years, and left to run BNY Mellon in 2017 until 2019.
Insider reviewed executive remarks, press releases, and earnings call transcripts, and spoke with experts about the bank and corporate governance to visualize how the bank’s management has changed since Scharf took over.
Wells has sought to rebuild its brand and convince regulators it has improved risk management since a phony-accounts scandal erupted in 2016.
Federal and local authorities found that Wells Fargo employees, under pressure to reach unrealistic sales goals set by supervisors, opened millions of fraudulent accounts without customers’ knowledge.
The Federal Reservein February 2018 imposed an unprecedented asset cap limiting the bank’s growth, in addition to other consent orders from regulators. The bank created a marketing slogan three years ago: “Established 1852, re-established 2018.”
In February, Bloomberg reported that Fed officials had quietly signaled approval for Wells Fargo’s overhaul plan, but the bank remains under the asset cap.
Scharf has generally been “methodical” about hiring key leaders at Wells Fargo, said Ken Leon, director of equity research at CFRA Research.
“The challenge becomes, in terms of being a change agent for culture or best practices, for the senior leadership team to have the right people in place as you go down to the second and third tiers of senior leadership,” he said.
The board’s changing face
Wells’s board has also transformed. When the bank’s growth cap was imposed in 2018, the Fed said that Wells would replace four of its board members that year.
Half of the board, including Scharf, have joined since 2019. In early August, Steven Black, a board member since 2020 and co-CEO of private-equity firm Bregal Investments, was tapped to replace Charles Noski as chairman.
Black and Scharf have known each other for years: Black served on BNY Mellon’s board while Scharf was CEO, and they overlapped while at JPMorgan.