By Mark Calvey – Senior Reporter, San Francisco Business Times Mar 28, 2019
Wells Fargo said Thursday that Tim Sloan will retire at the end of June, but is stepping down immediately as CEO, president and board member.
The board named General Counsel Allen Parker as interim CEO and president, while the bank begins a search for a permanent CEO. In a dramatic move for a bank that has long promoted from within, Wells Fargo (NYSE: WFC) said its next CEO will come from outside the bank.
Sloan’s departure after more than 30 years with the bank marks the end of an era for the San Francisco-based bank that’s been rocked by a series of scandals that first came to light in 2016.
“Tim Sloan has served this company with pride and dedication for more than 31 years, including in his role as CEO since October 2016. He has worked tirelessly over this period for all of our stakeholders in the best long-term interest of Wells Fargo. His decision, and today’s announcement, reflect that commitment and his belief that a new CEO at this time will best position the company for success,” Wells Fargo Board Chair Betsy Duke said in a statement.
Sloan said that he thought the time was right to hand over the reins.
“I am very proud of what we have accomplished together. In my time as CEO, I have focused on leading a process to address past issues and to rebuild trust,” Sloan said in a statement. “We have made progress in many areas and, while there remains more work to be done, I am confident in our leadership team and optimistic about the future of Wells Fargo.”
Sloan added that it’s become clear to him that the bank will “benefit from a new CEO and fresh perspectives.”
Parker, 64, joined Wells Fargo as general counsel in March 2017. He was previously presiding partner at the law firm of Cravath, Swaine & Moore from January 2013 until December 2016.
“In my two years at Wells Fargo, I have been deeply impressed with the commitment of our 259,000 team members to move this great company forward and to build an even stronger foundation for the future,” Parker said in a statement. “I am fully committed to this role as we continue the important work at hand in support of all our stakeholders, particularly our customers, and prepare for a smooth and effective transition to a permanent CEO.”
Long-time observers of the bank have seen the toll that Wells Fargo’s woes have taken on Sloan. He got into a public fight with the state of California’s then Treasurer John Chiang, who was running for governor at the time. At times, there was tension between Sloan and members of the media.
This month, Sloan looked tired and stressed in addressing a congressional hearing on the bank’s progress in recovering from scandals that included opening millions of accounts not authorized by customers as employees sought to meet ambitious sales goals.
But this week, Sloan appeared at the Bank Policy Institute’s Fintech Ideas Festival in San Francisco, where he discussed the outlook for a world without computer passwords and actually joked with PayPal (NASDAQ: PYPL) CEO Dan Schulman and others in the audience on a variety of topics.
There was no mention of Wells Fargo’s problems during the program except for a brief introduction that called Sloan the busiest man in banking.
Earlier Thursday, Warren Buffett voiced his support for Tim Sloan. Buffett is CEO of Wells Fargo’s largest shareholder, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B).
“I’m very empathetic to anybody who walks into a big problem at a very, very, very large and politically sensitive institution,” Buffett told CNBC, recalling his days of stepping in and leading investment bank Salomon Brothers as it sought to recover from a major scandal.
But today’s change in leadership at Wells was increasingly anticipated.
“We are not surprised by today’s announcement as numerous potential candidates for the CEO position have been floated in the press,” RBC Capital Markets analyst Gerard Cassidy told clients. Most recently, former Goldman Sachs President Harvey Schwartz reportedly was approached by Wells Fargo board members about the job.
“Ongoing congressional opprobrium and heightened regulatory scrutiny has made Sloan’s position at the company increasingly tenuous, in our view,” Cassidy said. “We had expected that an eventual change in leadership was a likely outcome as the company seeks to distance itself from its sales-practice issues.”
