Wells Fargo’s new CEO, Charlie Scharf, was angry when he first called for a boss.
“We made some terrible mistakes and did not effectively correct our shortcomings.”
Wells Fargo’s new CEO, Charlie Scharf, said on Tuesday in his first quarterly earnings statement as head of the renowned bank. Years after the bank’s scam for fake accounts, this was impressive evidence of how little, in the opinion of bank directors, has changed at the San Francisco-based institution.
“We still have a lot of work to do to overcome these problems,” said Scharf, adding that he spent almost all of his time as CEO trying to consolidate the bank’s tarnished public image and regulators to address’ concerns. “We will take all necessary measures. Our future success depends on solving these problems, so we will act accordingly.
“The management team will be judged and accounted for solving these problems.”
Scharf’s job is not just to restore the bank’s reputation. He must also engage in an industry-wide digital transformation and reduce inefficiencies.
These challenges were reflected in a quarterly earnings report for Wells Fargo, which disappointed Wall Street, in part due to a $ 1.5 billion litigation fee, in part related to the fake account scandal; Stocks fell about 5% Tuesday.
The results should not affect Scharf’s reputation among investors – he was only in the role for a few months and is in the middle of a full review of the company. These reforms, as well as the way he deals with the bank’s regulators, will determine whether it will last longer than its volatile predecessors.
These executives promised to act quickly to solve the myriad bank’s innumerable problems that began with years of replaying a false account scandal and spreading to distant parts of the bank like a sickly wagon business. They are all unemployed and most of these ailments persist.
Waiting for answers
Scharf took a different path on Tuesday, preached caution and asked investors to be patient. He even said that he was not sure whether any of the bank’s “public issues” would be resolved this year.
And those who were looking for how Scharf could solve these problems were out of luck.
Despite Wall Street analysts’ request for clarity and detail, Scharf refused to detail Wells Fargo’s future in terms of earnings.
Wells Fargo’s 27,000 employees in Charlotte – most of all cities – will likely have to wait for clarity about the bank’s future.
At the conference call, he said there were parts of the company that were “extremely inefficient” but refused to provide details on where and to what extent cuts could be made. Business areas that are not of central importance to the bank may be “cropped”, but details of what this could look like are scarce.
Scharf has already made some changes in his few months.
He promoted two new executives, both based in New York, and is currently hiring a new general counsel. He began to move the decentralized bank’s power center from its San Francisco headquarters to New York, where Scharf is based.
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