Scharf states he ended up being psychological as $1.95 trillion asset cap raised

Focus shifts to development in charge card, investment banking

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Wells Fargo shares increase nearly 9% this year

By Nupur Anand, Lananh Nguyen

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

"Everyone thinks that I'm this difficult, difficult individual ... however it's been so long in the making, it's affected a lot of individuals so negatively," Scharf said. "Suddenly, it's like it's all deserved it and everybody's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, pledging to repair its deeply entrenched problems from a fake-accounts scandal that emerged in 2016. The bank faced a public protest, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's choice to raise one of Wells Fargo's last major punishments today has largely closed that chapter in its history. It likewise seals Scharf's legacy after an intense turn-around in which he revamped management, slashed headcount and shed businesses.

"I feel fantastic," Scharf informed Reuters in a wide-ranging interview on Wednesday after being swamped by congratulatory messages from employees and equivalents 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 broaden even more in charge card and financial investment banking, while likewise investing in wealth and industrial banking.

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

As Wells Fargo intends to increase profits, it plans to raise its dividend to keep payments constant for investors, Scharf stated. Share buybacks will continue, but their speed will probably slow as the bank buys development, he said.

Scharf, who previously ran BNY and Visa, took over scandal-plagued Wells Fargo after his two predecessors were ousted. He set up brand-new leadership, slashed more than 55,000 jobs, exited unprofitable businesses and remodelled the bank's danger management and controls. In an effort to transform its culture, he likewise reworked the company's performance review process to improve accountability.

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

"The pressure, by the method, for me - it does not disappear, it simply alters" from concentrating on historical problems to future growth, Scharf said. "I'm not going to work any less tough, 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 actually been modified for length and clearness.

REACTIONS

I feel fantastic. I felt a little emotional the other day. Everyone believes I'm this tough, difficult person, and I'm not actually. It's been so long in the making, it's impacted many individuals so adversely. And I began getting notes right away from everyone, but specifically people who work here. I would state 80% of them, 75% of them had to do with their experience here over an amount of time and how happy they are now, and appreciative. Twenty percent had to do with the $2,000 (stock award) we were offering them.

Suddenly, it resembles it's all deserved it and everyone's feeling it. It's everyone, and I truly do believe that everyone who is here has actually been impacted by the work. Some straight, since they needed to do it, however even simply people needing 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 staying services that we have, with the slight exception of our mortgage company, all have opportunities to grow and produce higher returns.

So it's true of the wealth company through commercial still real of CIB (business and financial investment banking), because despite the fact that we're seeing results and substantial upside there, it holds true in our service, and super notably, it holds true in our customer and little business banking service, where they were most impacted 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 haven't been able to.

People always ask me, "What are the top 3 priority locations for development?" And I attempt not to respond to the concern, due to the fact that I actually think every line of work has a chance.

ACQUISITIONS

Not on the short list today. At some time, abilities around payments, around rewards, around the motion of securities, would we want to 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 desire to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some ways, it's a completely different business. The culture is different here, it's not a "me" culture. People want to be dealt with fairly, they want to be paid fairly, but they come here since they want to work together. That is incredibly crucial.

Reached an extreme, it harmed us since we didn't make challenging choices about people, we didn't face things. But I do think a culture like that, in a balanced way, is incredible to have. It takes a long time to construct.

We have real responsibility in the organization, which's those that's favorable, that's negative, but it likewise brings with it a strong desire to assist people improve.

It's a lot more of a meritocracy. Nothing's perfect. We have actually still got a methods to go, but it drives efficiency. Every senior leader is anticipated to be included in a detailed method both the strategy and the execution of their company strategy.

HEADCOUNT

We're including lenders, sales people, relationship managers in the commercial bank, technology resources. We're simply funding it through performances that we're getting elsewhere. There's substantial opportunities to become more efficient.

BUYBACKS AND DIVIDENDS

We've been buying a lot of stock back, and I prepare for 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 payout ratio. We hope to have the ability to regularly increase the dividend at a sensible level.

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

FUTURE PLANS

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

As hard as I have actually been working, we find time to do the things that permit 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've spoken with just about all the big banks' CEOs congratulating us. When you're on the within these things, you know how tough they truly are and what it takes. Folks have stated it's excellent for the industry. A strong Wells Fargo, without those restraints, enables Wells to be able to support development. And even though we're all very competitive, a strong U.S. is a great thing.

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