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Scharf says he became emotional as $1.95 trillion asset cap lifted

Focus shifts to growth in credit cards, financial investment banking

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Wells Fargo shares increase almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK CITY, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf understands he has a track record for sternness, but he said that when the bank was lastly devoid of a $1.95 trillion property cap by regulators on Tuesday, he became emotional.

"Everyone believes that I'm this difficult, difficult individual ... however it's been so long in the making, it's impacted a lot of people so adversely," Scharf said. "Suddenly, it's like it's all been worth it and everyone's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, swearing to fix its deeply entrenched issues from a fake-accounts scandal that erupted in 2016. The bank dealt with a public outcry, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's choice to lift one of Wells Fargo's last significant penalties this week has actually largely closed that chapter in its history. It likewise cements Scharf's legacy after an intense turn-around in which he overhauled management, slashed headcount and shed services.

"I feel terrific," Scharf told Reuters in a comprehensive interview on Wednesday after being flooded by congratulatory messages from employees and equivalents at other banks.

He is turning his focus to development after serving practically 6 years as Wells Fargo's fixer-in-chief. He prepares to broaden further in charge card and financial investment banking, while also investing in wealth and industrial banking.

It will not broaden in mortgages, he said. The bank exited a number of those operations after they were beleaguered by scandal.

As Wells Fargo aims to increase profits, it plans to raise its dividend to keep payouts constant for financiers, Scharf stated. Share buybacks will continue, but their rate will most likely slow as the bank invests in growth, he stated.

Scharf, who previously ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He installed brand-new leadership, slashed more than 55,000 tasks, exited unprofitable organizations and reworked the bank's threat management and controls. In an effort to transform its culture, he also revamped the business's efficiency evaluation process to enhance accountability.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having climbed more than 8% so far this year as investors ended up being more positive about the bank shedding its regulatory luggage.

"The pressure, by the method, for me - it does not go away, it just alters" from concentrating on historical issues to future development, Scharf said. "I'm not going to work any less difficult, I'm not going to feel any less pressure, I'll most likely have more fun."

Below is a transcript of Reuters' interview with Scharf, which has been modified for length and clearness.

REACTIONS

I feel excellent. I felt a little emotional yesterday. Everyone thinks I'm this hard, difficult individual, and I'm not actually. It's been so long in the making, it's affected numerous individuals so negatively. And I started getting notes instantly from everyone, however especially individuals who work here. I would state 80% of them, 75% of them were about their experience here over an amount of time and how proud they are now, and glad. Twenty percent were about the $2,000 (stock award) we were providing.

Suddenly, it's like it's all been worth it and everybody's sensation it. It's everyone, and I truly do think that everyone who is here has been impacted by the work. Some straight, due to the fact that they had to do it, but even simply individuals having to speak with their family and pals on weekends about Wells Fargo news, and why do they still work here? You put people through a lot.

GROWTH AREAS

I would expect that across all the staying organizations that we have, with the slight exception of our mortgage service, all have chances to grow and produce greater returns.

So it's real of the wealth business through commercial still true of CIB (business and financial investment banking), because despite the fact that we're seeing outcomes and considerable upside there, it holds true in our business, and very importantly, it holds true in our consumer and small company banking organization, where they were most affected by the sales practice scandal. We're just introducing disciplines back to be able to serve customers more broadly and grow in manner ins which we haven't had the ability to.

People always ask me, "What are the top three top priority areas for growth?" And I attempt not to address the concern, due to the fact that I really believe every industry has an opportunity.

ACQUISITIONS

Not on the brief list right now. At some time, capabilities around payments, around rewards, around the movement of securities, would we be willing to look at something like that? Sure. But we haven't even begun to consider what that is. And we still have more work to do. We don't desire to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a totally various company. The culture is different here, it's not a "me" culture. People want to be treated fairly, they want to be paid fairly, however they come here due to the fact that they wish to collaborate. That is incredibly important.

Carried to a severe, it injured us due to the fact that we didn't make hard decisions about people, we didn't face things. But I do think a culture like that, in a balanced method, is amazing to have. It takes a very long time to develop.

We have real accountability in the organization, and that's those that's positive, that's unfavorable, but it likewise brings with it a strong desire to assist people improve.

It's a lot more of a meritocracy. Nothing's best. We have actually still got a methods to go, however it drives efficiency. Every senior leader is anticipated to be involved in a comprehensive method in both the method and the execution of their organization plan.

HEADCOUNT

We're including lenders, sales people, relationship managers in the commercial bank, innovation resources. We're just funding it through performances that we're getting in other places. There's substantial chances to become more effective.

BUYBACKS AND DIVIDENDS

We have actually been purchasing a great deal of stock back, and I prepare for that we'll continue to purchase stock back. So on the dividend, what we desire to have the ability to do is increase the profits capacity of the business (and) increase the dividend to keep a relatively consistent payment ratio. We wish to be able to consistently increase the dividend at a reasonable level.

Hopefully we'll have more chances to invest inside the company so we'll likely purchase less stock back than we had.

FUTURE PLANS

(Scharf's pastimes of woodworking, playing guitar and tennis.)

As tough as I've been working, we discover time to do the things that permit us to regenerate.

I'm not going to work any less difficult, I'm not going to feel any less pressure. I'll most likely have more enjoyable.

INDUSTRY REACTION

I have actually spoken with just about all the huge banks' CEOs congratulating us. When you're on the within of these things, you know how hard they actually are and what it takes. Folks have stated it's excellent for the industry. A strong Wells Fargo, without those restrictions, enables Wells to be able to support growth. And despite the fact that we're all extremely competitive, a strong U.S. is an advantage.

(Reporting by Nupur Anand and Lananh Nguyen in New York City; Editing by Matthew Lewis)
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