April 29, 2019 – Wells Fargo & Company’s board of directors has retained executive search firm Spencer Stuart to recruit a new chief executive officer. The banking giant is looking to hire a leader, preferably a woman, to take on the challenges of the organization’s tainted public image and regulatory issues, according to sources in the executive search industry and a report by Reuters. CEO Tim Sloan abruptly left the bank last month. He was the second to depart in the wake of ongoing scandal and miscues.
Mr. Sloan opted to step down because his presence was hurting the company, he said in a conference call after the announcement. “It has become apparent that the focus on me has become a distraction that impacts our ability to successfully move Wells Fargo forward,” he said.
The board said in a statement that it was best to seek an outside candidate to replace Mr. Sloan. The bank’s general counsel, C. Allen Parker, will serve as interim CEO while Spencer Stuart conducts the search.
“The board has a continuous succession planning process through which we identify potential successors within the company,” said Wells Fargo board chair Betsy Duke. “Although we have many talented executives within the company, the board has concluded that seeking someone from the outside is the most effective way to complete the transformation at Wells Fargo.”
“Accordingly, we will immediately initiate an external search and have selected Allen to serve as interim CEO,” she said. “During this search period, the board and I will work closely with Allen and the company’s leadership team to continue to move forward on Wells Fargo’s goals and commitments.”
Hopes to Improve Image
The bank is looking to become the only major U.S. banking institution with a female CEO, and hopes the new optics will boost its image with the public, as well as banking regulators and politicians, after a 2016 scandal in which it opened millions of accounts without customer authorization.
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In 2018, Wells Fargo said it would take “any appropriate action” following a wide-ranging investigation into gender bias at the bank after several female employees raised complaints about discrimination. The pledge followed allegations, first detailed in the Wall Street Journal, that Jay Welker, president of the firm’s private bank and wealth management head, said that women should be home taking care of children instead of working.
Other bank-wide accusations have included women being passed over for jobs as well as bias that has kept any woman from rising to a senior managing director role, according to the Wall Street Journal.
Seeking a fresh start by enlisting an outsider is an approach that has gone unused for a while. The nation’s four largest commercial banks haven’t made such a move since a wave of mergers took place in the 1990s. Here are five of the most likely outside candidates according to Bloomberg:
- Gordon Smith: Wells Fargo’s biggest rival, JPMorgan Chase, is widely seen as having the most executives capable of running the company. Mr. Smith is a potential contender for his own bank’s top job, as Jamie Dimon handed off some responsibility at the beginning of last year in promoting him to co-president. Mr. Smith also runs JPMorgan’s consumer-banking unit, the biggest revenue contributor. His business has attracted deposits and won new clients with its Sapphire Reserve credit card. Mr. Smith joined the bank in 2007 from American Express Co., and he’s awaiting more than $50 million of unvested equity awards, according to Bloomberg.
- Marianne Lake: JPMorgan’s chief financial officer, more than a decade younger than Mr. Smith, is another potential successor to Mr. Dimon. While Ms. Lake has never run any of JPMorgan’s major business lines, she’s well-known to investors and analysts for her handle on a sprawling bank’s operations. Wells Fargo, which made Elizabeth Duke the first female chair of one of the largest U.S. banks in 2017, could make Ms. Lake the first woman to ever run one of them.
Wall Street Headcount Shrinking, But Recruiters Still See Opportunities
Competition among recruiters in the financial sector has always been fierce, and that’s no less true in 2018. Although the Great Recession is receding further away in the rearview mirror and things may soon be looking up in terms of regulations.
- Dean Athanasia: Mr. Athanasia is head of Bank of America’s consumer and small-business division. He is leading a branch expansion into new states and has cut costs and boosted loans at the bank’s largest profit contributor. Based in Boston, Mr. Athanasia previously was a wealth-management executive, which could be useful since Wells Fargo has a $1.7 trillion wealth business.
- Jane Fraser: Citigroup Inc.’s Latin America chief has experience with both a U.S. retail-banking business and shaking things up. Ms. Fraser ran Citi’s U.S. consumer business before taking on her current role in 2015. She has since sold off operations across Brazil, Argentina and Colombia to simplify the unit and boost profitability.
- Matt Zames: The former JPMorgan executive was a candidate last year for the top job at Deutsche Bank AG. Instead, Mr. Zames became president of private equity firm Cerberus Capital Management, where he’s now advising the German company. He helped clean up after JPMorgan’s London Whale mess, which might be good practice for righting Wells Fargo, Bloomberg said.
Wells Fargo & Company is a diversified, community-based financial services Company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, the company provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,800 locations, more than 13,000 ATMs, the internet and mobile banking, and has offices in 37 countries and territories.
The financial services sector represents fully one fifth of Spencer Stuart’s worldwide client base. The firm’s financial industry search specialists have conducted more than 5,100 searches since 2011, on average more than 1,000 annually. The recruiter partners with financial services entities to find talent across a spectrum of related sectors and capabilities, including asset management, consumer financial services, financial technology, global banking and markets, insurance, private wealth management, real estate and risk.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media