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Scharf says he ended up being psychological as $1.95 trillion possession cap lifted

Focus shifts to growth in charge card, investment banking
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Wells Fargo shares increase almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a track record for sternness, however he said that when the bank was lastly devoid of a $1.95 trillion possession cap by regulators on Tuesday, he ended up being psychological.

"Everyone thinks that I'm this tough, difficult individual ... but it's been so long in the making, it's affected a lot of individuals so adversely," Scharf said. "All of an abrupt, it's like it's all deserved it and everybody's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to repair its deeply entrenched issues from a fake-accounts scandal that erupted 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 choice to lift one of Wells Fargo's last major penalties today has mainly closed that chapter in its history. It also seals Scharf's legacy after a difficult turn-around in which he upgraded management, slashed headcount and shed organizations.

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

He is turning his focus to development after serving almost 6 years as Wells Fargo's fixer-in-chief. He prepares to expand further in credit cards and investment banking, while likewise purchasing wealth and industrial banking.

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

As Wells Fargo intends to increase profits, it prepares to raise its dividend to keep payouts constant for investors, Scharf said. Share buybacks will continue, however their rate will most likely slow as the bank buys development, he said.

Scharf, who previously ran BNY and Visa, took control of scandal-plagued Wells Fargo after his two predecessors were ousted. He set up new management, slashed more than 55,000 jobs, left unprofitable businesses and reworked the bank's risk management and controls. In an effort to change its culture, he likewise reworked the business's efficiency evaluation procedure to increase responsibility.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having actually climbed more than 8% up until now this year as financiers ended up being more positive about the bank shedding its regulative luggage.

"The pressure, by the way, for me - it does not go away, it simply alters" from concentrating on historical issues to future growth, Scharf said. "I'm not going to work any less hard, I'm not going to feel any less pressure, I'll probably have more fun."

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

REACTIONS

I feel great. I felt a little psychological yesterday. Everyone believes I'm this difficult, tough individual, and I'm not really. It's been so long in the making, it's affected a lot of people so adversely. And I started getting notes right away from everybody, however specifically individuals who work here. I would state 80% of them, 75% of them were about their experience here over a period of time and how happy they are now, and glad. Twenty percent were about the $2,000 (stock award) we were providing.

Suddenly, it resembles it's all deserved it and everyone's sensation it. It's everybody, and I truly do believe that everybody who is here has actually been affected by the work. Some directly, because they had to do it, but even just individuals having to speak to their friends and family on weekends about Wells Fargo news, and why do they still work here? You put individuals through a lot.

GROWTH AREAS

I would anticipate that across all the remaining businesses that we have, with the minor exception of our mortgage company, all have opportunities to grow and produce higher returns.

So it holds true of the through commercial still real of CIB (corporate and investment banking), due to the fact that although we're seeing results and significant upside there, it's true in our business, and incredibly significantly, it holds true in our consumer and small company banking business, where they were most affected by the sales practice scandal. We're just presenting disciplines back to be able to serve customers more broadly and grow in manner ins which we have not been able to.

People always ask me, "What are the top three priority areas for development?" And I attempt not to address the question, due to the fact that I really think every line of work has an opportunity.

ACQUISITIONS

Not on the list today. At some time, abilities around payments, around rewards, around the movement of securities, would we be willing to take a look at something like that? Sure. But we have not even started to think about 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 methods, it's a completely various company. The culture is various here, it's not a "me" culture. People wish to be dealt with fairly, they wish to be paid relatively, however they come here since they wish to work together. That is incredibly crucial.

Reached an extreme, it injured us since we didn't make tough choices about people, we didn't confront things. But I do believe a culture like that, in a well balanced way, is unbelievable to have. It takes a long time to develop.

We have real accountability in the company, which's those that's favorable, that's negative, but it also brings with it a strong desire to help people get better.

It's much more of a meritocracy. Nothing's best. We've still got a ways to go, however it drives efficiency. Every senior leader is expected to be associated with an in-depth way in both the technique and the execution of their service plan.

HEADCOUNT

We're adding lenders, sales individuals, relationship managers in the industrial bank, technology resources. We're just moneying it through effectiveness that we're getting in other places. There's substantial opportunities to become more effective.

BUYBACKS AND DIVIDENDS

We have actually been purchasing a great deal of stock back, and I expect that we'll continue to buy stock back. So on the dividend, what we want to be able to do is increase the earnings capacity of the business (and) increase the dividend to keep a reasonably consistent payout ratio. We want to have the ability to regularly increase the dividend at a reasonable level.

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

FUTURE PLANS

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

As tough as I've been working, we find time to do the important things that permit us to restore.

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

INDUSTRY REACTION

I've heard from almost all the big banks' CEOs congratulating us. When you're on the within of these things, you know how difficult they actually are and what it takes. Folks have stated it's good for the industry. A strong Wells Fargo, without those restrictions, enables Wells to be able to support development. And although we're all really competitive, a strong U.S. is a good idea.

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