Wells Fargo CEO hunt, day 106: Talks with a top BofA executive
More than 100 days into Wells Fargo’s hunt for a chief executive officer, the field of potential candidates has winnowed — but there’s little sign that an appointment is imminent.
After twists and turns in the search, Bank of America’s Cathy Bessant is among executives who remain in talks with Wells Fargo, while JPMorgan Chase’s Gordon Smith won’t be taking the job, according to people with knowledge of the situation. Still, directors have yet to settle on a long-term successor for Tim Sloan, who abruptly stepped down in March, the people said, asking not to be named discussing the confidential process.
Even when the board makes a decision, it must give the Office of the Comptroller of the Currency as long as 90 days to weigh in before completing the appointment — though the regulator may not take that long to finish its review.
Wells Fargo is set to report earnings next week for a second quarter under an interim leader, putting pressure on the bank to update shareholders on its progress toward resolving the uncertainty. Its stock has been lagging behind rivals since mounting political pressure culminated in Sloan’s exit and prompted the board to promise it would find an outsider to take over. Now, some of the bank’s most vocal critics on Capitol Hill are citing the prolonged hunt as proof that Wells Fargo is “too big to manage.”
A company spokeswoman declined to comment.
Wall Street began trying to guess Wells Fargo’s next CEO months before Sloan even stepped down, in a parlor game that’s intensified in recent weeks.
It began last year with rumors the board had reached out to investment banking veterans such as Goldman Sachs’s former president, Gary Cohn, about potentially taking over. But many of those theories were punctured when Wells Fargo’s top shareholder, Warren Buffett, said the board should look outside of Wall Street.
Behind the scenes, a growing number of senior executives who have worked at more traditional lenders have indicated, usually to confidants, they aren’t currently in talks or interested in the job after analysts and recruiters floated their names as likely contenders. PNC Financial Services Inc. CEO Bill Demchak and former U.S. Bancorp CEO Richard Davis are among more than a half-dozen industry veterans in that camp.
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Observers also have suggested Bank of New York Mellon CEO Charlie Scharf and former American Express CEO Ken Chenault. Yet people who know Scharf said they strongly doubt he would accept the job after leaving Visa and the Bay Area only a few years ago to return to the East Coast. And at 68, Chenault could be disqualified by Wells Fargo’s retirement age of 65, unless the board waived it.
Smith, who runs JPMorgan’s consumer business and is the New York-based bank’s co-president and co-chief operating officer, was initially seen as a leading — if not the leading — outside contender capable of taking over Wells Fargo. As it became clearer in recent weeks that some of the most obvious candidates were out of the running, analysts and investors have increasingly weighed the merits of those left.
They include Bessant, Bank of America’s head of technology and operations — keeping alive speculation that a woman might ascend to the top of one of the nation’s giant lenders. She’s spent decades at Bank of America and its predecessors, running operations that serve consumers, small businesses and global corporations. Wells Fargo could use her experience overhauling internal systems and working with regulators. A Bank of America spokesman declined to comment.
It was always clear that recruiting a replacement for Sloan would be a major challenge, with few people qualified and available to take over the nation’s fourth-largest bank in the midst of crises. Wells Fargo is still addressing customer abuses in a variety of businesses, seeking to rebuild its reputation and appease regulators limiting its growth. Sloan, a longtime insider who was groomed for the top job, spent 2 1/2 years pushing through management changes and reforms only to have lawmakers and watchdogs deem his progress too slow.
Since Sloan stepped down on March 28, Wells Fargo’s stock has slid 4%, lagging behind the almost 6% advance of the KBW Bank Index. Larger rivals JPMorgan, Bank of America and Citigroup have each gained more than 7%.
Senior executives at Wells Fargo have pushed for months to keep interim CEO Allen Parker around longer, and he’s privately signaled his willingness to see through the bank’s rehabilitation, people familiar with the situation have said. Parker joined the firm as general counsel in 2017, after its first scandals emerged, to help clean things up.
Last month, the OCC signaled that the bank is right to look beyond its senior ranks for new leadership but stopped short of ruling out Parker. “We are aware that the Wells Fargo board has stated it is seeking external candidates to fill the CEO position,” the regulator said in a statement. “And we support that criteria.”