February 11, 2020
Wells Fargo to Rework Its Business Lines Under New CEO Charlie Scharf
(Bloomberg) — Wells Fargo & Co. is splitting its investment bank into its own unit and separating consumer lending under a new leader as Chief Executive Officer Charlie Scharf reorganizes the company.
- The overhaul will divide the bank’s business lines into five units from three previously, Wells Fargo said in a statement Tuesday. Its wholesale unit will be split into a commercial bank and an investment bank that focuses on capital markets.
- The sweeping changes mark Scharf’s first major set of overhauls after almost four months at the helm of Wells Fargo. “These organizational changes enable us to more effectively pursue our goals and take advantage of the opportunities in front of us,” Scharf said in the statement.
- The bank is hiring Mike Weinbach from JPMorgan Chase & Co. to run the new consumer-lending division, according to the statement. He will join Wells Fargo in early May.
- Weinbach will take on some of the responsibilities of Mary Mack, who is becoming CEO of consumer and small business banking.
- Perry Pelos, who most recently led wholesale banking, will lead the commercial banking part of that business, while Jon Weiss, most recently head of wealth and investment management, becomes CEO of corporate and investment banking. The bank will search for a new wealth head.
- The moves come as Wells Fargo works to regain customer trust and mend ties with regulators and elected officials following years of scandals that claimed the last two CEOs. “I am confident that this organizational model and our strengthened risk and control foundation will bring greater focus and accountability to the company,” Scharf said.
- Wells Fargo shares are down 11% this year, the second-worst performance in the 24-company KBW Bank Index.
- In the first weeks of his tenure, Scharf held a marathon of meetings with executives across the firm, asking them about the ways they do business. “Everything’s on the table for consideration,” Chief Financial Officer John Shrewsberry said of Scharf’s reviews at an investor conference late last year.
- Scharf struck a cautious tone during his first earnings call last month, warning investors that he’s not suggesting any of the firm’s public issues will be resolved this year.