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Scharf states he became psychological as $1.95 trillion asset cap lifted

Focus shifts to growth in credit cards, financial investment banking

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Wells Fargo shares rise nearly 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK CITY, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a credibility for sternness, but he said that when the bank was finally released of a $1.95 trillion asset cap by regulators on Tuesday, he ended up being psychological.

"Everyone believes that I'm this tough, difficult individual ... but it's been so long in the making, it's affected a lot of individuals so negatively," Scharf said. "All of an unexpected, it's like it's all deserved it and everyone's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, pledging to fix its deeply entrenched issues from a fake-accounts scandal that appeared in 2016. The bank dealt with a public outcry, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's decision to raise among Wells Fargo's last significant penalties this week has actually largely closed that chapter in its history. It likewise seals Scharf's tradition after a difficult turnaround in which he upgraded management, slashed headcount and shed companies.

"I feel fantastic," Scharf informed Reuters in a wide-ranging interview on Wednesday after being swamped by congratulatory messages from staff members and counterparts at other banks.

He is turning his focus to growth after serving almost 6 years as Wells Fargo's fixer-in-chief. He plans to expand even more in credit cards and investment banking, while likewise buying wealth and business banking.

It will not expand in mortgages, he stated. The bank exited numerous of those operations after they were besieged by scandal.

As Wells Fargo aims to increase earnings, it prepares to raise its dividend to keep payments constant for investors, Scharf stated. Share buybacks will continue, but their pace will probably slow as the bank buys growth, he said.

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his two predecessors were ousted. He set up brand-new management, slashed more than 55,000 jobs, left unprofitable organizations and revamped the bank's danger management and controls. In an effort to change its culture, he likewise revamped the business's efficiency evaluation process to boost responsibility.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having actually climbed up more than 8% so far this year as financiers became more positive about the bank shedding its regulative baggage.

"The pressure, by the way, for me - it doesn't go away, it simply changes" from concentrating on historical issues to future growth, 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 enjoyable."

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

REACTIONS

I feel excellent. I felt a little psychological yesterday. Everyone thinks I'm this difficult, tough person, and I'm not in fact. It's been so long in the making, it's affected a lot of individuals so negatively. And I began getting notes instantly from everyone, but specifically people who work here. I would state 80% of them, 75% of them were about their experience here over a time period and how proud they are now, and glad. Twenty percent were about the $2,000 (stock award) we were offering them.

All of an unexpected, it it's all deserved it and everyone's sensation it. It's everyone, and I really do believe that everyone who is here has been affected by the work. Some directly, since they needed to do it, but even simply individuals having to speak with their household and good friends on weekends about Wells Fargo news, and why do they still work here? You put individuals through a lot.

GROWTH AREAS

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

So it holds true of the wealth company through commercial still real of CIB (business and financial investment banking), due to the fact that even though we're seeing results and significant upside there, it holds true in our service, and incredibly importantly, it's real 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 methods that we haven't been able to.

People always ask me, "What are the top 3 concern areas for development?" And I try not to respond to the concern, since I really think every line of service has a chance.

ACQUISITIONS

Not on the list right now. At a long time, abilities around payments, around benefits, around the movement of securities, would we want to take a look at something like that? Sure. But we have not even started to think of what that is. And we still have more work to do. We don't wish to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some ways, it's a completely various business. The culture is different here, it's not a "me" culture. People desire to be dealt with relatively, they wish to be paid fairly, however they come here due to the fact that they wish to collaborate. That is incredibly essential.

Reached an extreme, it injured us due to the fact that we didn't make tough choices about individuals, we didn't challenge things. But I do think a culture like that, in a well balanced method, is extraordinary to have. It takes a long period of time to build.

We have genuine responsibility in the company, which's those that's positive, that's negative, but it also brings with it a strong desire to help people get much better.

It's a lot more of a meritocracy. Nothing's perfect. We have actually still got a methods to go, however it drives performance. Every senior leader is expected to be associated with an in-depth method both the technique and the execution of their business plan.

HEADCOUNT

We're adding bankers, sales individuals, relationship managers in the business bank, technology resources. We're simply moneying it through efficiencies that we're getting elsewhere. There's significant opportunities to become more efficient.

BUYBACKS AND DIVIDENDS

We've been purchasing a lot of stock back, and I anticipate that we'll continue to purchase stock back. So on the dividend, what we wish to have the ability to do is increase the profits capability of the business (and) increase the dividend to keep a reasonably constant payment ratio. We hope to have the ability to regularly increase the dividend at a reasonable level.

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

FUTURE PLANS

(Scharf's hobbies include woodworking, playing guitar and tennis.)

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

I'm not going to work any less tough, I'm not going to feel any less pressure. I'll probably have more fun.

INDUSTRY REACTION

I have actually spoken with practically all the huge banks' CEOs congratulating us. When you're on the within of these things, you know how tough they truly are and what it takes. Folks have said it's great for the industry. A strong Wells Fargo, without those restraints, allows Wells to be able to support development. And even though we're all very competitive, a strong U.S. is an advantage.

(Reporting by Nupur Anand and Lananh Nguyen in New York City