Yesterday, news broke that former chief executive Wells Fargo & Co (NYSE:WFC) John Stumpf had resigned, putting new CEO Timothy Sloan at the helm amid a far-reaching account-opening scandal.
Sloan will certainly have his hands full as he takes over just a year after Stumpf himself was promoted to the role. From the Wall Street Journal:
Mr. Sloan, 56 years old, took over immediately Wednesday from John Stumpf, who retired in the wake of the sales scandal and harsh criticism from lawmakers. The bank had groomed Mr. Sloan: A year ago, Wells Fargo named him president and chief operating officer, promoting him from head of the bank’s wholesale banking unit and earlier chief financial officer.
Many politicians had called for Stumpf to resign over the past few weeks, as he was subjected to repeated admonishment in front of Congress. For his part, Stumpf said he was “deeply sorry” for the bank’s misconduct, and pledged massive reforms to prevent such crimes from happening again.
But the pressure was just too much for him to handle, and likely in the company’s best interest, Stumpf finally acquiesced.
Now Sloan will do his best to undo the damage wrought under Stumpf’s leadership:
Mr. Sloan said in an interview with The Wall Street Journal Wednesday that he aims to improve the bank’s reputation by being “very focused” on addressing customers’ concerns, refunding customers for improper charges and ensuring the bank has the right products and services for them.
Sloan himself isn’t without blame in the scandal, however:
Mr. Sloan hasn’t completely escaped the scandal. During his appearance before the Senate Banking Committee, Mr. Stumpf said Mr. Sloan earlier this year spoke with Carrie Tolstedt, then head of community banking, the unit responsible for the bad behavior. His mission: tell her that “we want to go in a different direction” with the business and its approach to problems in it.
Tolstedt responded by saying she wanted to retire, and did so after receiving $90 million in total compensation. Sloan could have made the decision to fire Tolstedt instead, but for reasons that aren’t immediately clear, failed to do so.
Time will tell if Sloan can sway public opinion back in Wells Fargo’s favor, but if his own behavior amid the scandal is any indicator, he’s likely facing an uphill battle.
Wells Fargo shares fell $0.06 (-0.13%) to $45.26 in Thursday morning trading. Year-to-date, WFC has fallen 16.63%, versus a 1.8% gain in the banking sector-focused SPDR Financial Select Sector Fund (XLF).