By Nupur Anand, Lananh Nguyen
NEW YORK (Reuters) - Wells Fargo CEO Charlie Scharf knows he is known for his harshness, but he said he became emotional when the bank finally got rid of the $1.95 trillion cap by regulators on Tuesday.
"Everyone thinks I'm a strong, strong person...but it's been a long time, and it's so impactful for many people," Schaff said. "Suddenly, it's all worth it and everyone has its feelings."
Scharf, 60, was run by Wells Fargo in 2019 and vowed to fix deep-rooted problems in the fake account scandal that broke out in 2016. The bank faces strong public outcry, has been slammed by lawmakers and has been fined billions of dollars.
The Fed's decision to cancel one of Wells Fargo's last major penalty this week has basically closed the chapter in its history. It also cemented Scharf's legacy, after a hard transformation, he overhauled management and cut the number of employees.
"I feel great," Schaff told Reuters in an extensive interview Wednesday, after congratulations from other banks and peers were flooded with congratulations.
After nearly six years of working on Wells Fargo's fixator, he will shift his focus to growth. He plans to expand further in credit card and investment banking, while also investing in wealth and commercial banking.
That won't expand the mortgage, he said. Banks have withdrawn from many actions after being plagued by scandals.
Schaff said Wells Fargo aims to boost revenues and it plans to increase its dividend to keep investors consistent spending. He said the stock buyback will continue, but their pace may slow down as banks invest in growth.
Scharf, who previously ran BNY and Visa, took over the scandal-plagued Wells Fargo after two of his exes were removed. He installed new leadership, cut more than 55,000 jobs, exited unprofitable businesses, and redesigned the bank's risk management and control. To change his culture, he also redesigned the company's performance review process to improve accountability.
Wells Fargo shares rose 0.5% on Wednesday afternoon, and so far this year investors have become more optimistic about banks abandoning their regulatory luggage.
"By the way, for me, the stress doesn't go away, it just goes from focusing on historical issues to changes in future growth," Scharf said. "I won't work hard, I won't feel the stress is reduced, I may bring more fun." ”
Below is a transcript of Reuters' interview with Scharf, which has been edited to length and clarity.
reaction
I feel good. Yesterday I was a little excited. Everyone thinks I am a strong, strong person, and I am not. It's been a long time since it's been making it, and it's so affecting many people. I started to receive notes from everyone right away, especially those working here. What I want to say is that 80% of this is the experience here over a period of time and their pride now and thanks for their experience. Two percent of 20% is the $2,000 we give them (stock rewards).
Suddenly, it was all worth it and everyone felt it was. It's everyone, and I do believe that everyone here is affected by the work. Some are straightforward because they have to do it, but even if it's just people have to talk to family and friends about Wells Fargo news on weekends, why are they still working here? You've made people go through a lot.
Growth area
I hope that in all the remaining businesses we have, there are opportunities for everyone to grow and generate higher returns except our mortgage business.
So, the wealth business through the CIB (Company and Investment Banking) is right because despite the results and a lot of advantages we see there, it does in our business and very importantly, in our consumer and small business banking, where they are most affected by the sales business scandal. We are just introducing disciplines to be able to serve our clients more broadly and develop in ways that cannot be done.
People always ask me, “What are the first three priority areas of growth?” and I try not to answer this question because I really believe that every business has opportunities.
Acquisition
Not in the short list now. At some point, are we willing to look at something similar, around the ability to transfer payments, rewards, securities? certainly. But we haven't even started thinking about what that is. And we have more work to do. We don't want to be ahead of ourselves.
Wells Fargo Changes
In some ways, it's a completely different company. The culture here is different, it is not the culture of "me". People want to be treated fairly, they want to be paid fairly, but they come here because they want to work together. This is very important.
Bringing extremes, it hurts us because we don’t make difficult decisions about people, we don’t face things. But I do think that such a culture is incredible in a balanced way. It takes a long time to build.
We have real accountability in organizations, that’s those that are positive, that’s negative, but it also brings a strong desire to help people get better.
It's more like an elite management. Nothing is perfect. We still have a way to go, but it can drive performance. Each senior leader is expected to participate in the strategy and execution of their business plans in a detailed manner.
Car Name
We are adding bankers, sales staff, relationship managers in commercial banks, and technical resources. We just fund it through the efficiency we get elsewhere. There is a great opportunity to improve efficiency.
Buybacks and dividends
We have been buying a lot of stocks and I expect we will continue to buy stocks. So, on dividends, what we want to do is to increase the company's revenue capacity (and) increase the dividend to maintain a relatively consistent expenditure ratio. We want to be able to consistently increase dividends at reasonable levels.
Hopefully we will have more opportunities to invest in the business, so we may buy fewer stocks than we have previously purchased.
Future plans
(Scharf's hobbies include carpentry, playing guitar and tennis.)
Even though I have been working hard, we take time to do things that can be regenerated.
I won't work hard, I won't feel stressed. I might be very happy.
Industry reaction
I've heard of it from CEOs of almost every big bank, congratulations. When you are inside these things, you know what they are and what they need. People say it's good for the industry. The strong Wells Fargo, without these constraints, can enable the well to support growth. Even if we are all very competitive, it is a good thing for us to be strong.
(Reported by Nupur Anand and Lananh Nguyen, New York; Editor of Matthew Lewis)