The chief executive of Wells Fargo & Co. believes the embattled bank is in the middle innings of its effort to regain the trust of stakeholders, customers and even some antagonists.
On Wednesday, Timothy Sloan made his first visit to Winston-Salem as not only the bank’s top official, but also as its public face.
He held a town hall at Benton Convention Center attended by more than 800 of the bank’s 2,700 Triad employees.
Sloan was promoted in October 2016 after John Stumpf retired as chairman and chief executive. His arrival as CEO came in the early weeks of a fraudulent customer-account scandal that has rocked the bank’s once-sterling reputation.
Sloan’s primary duties have been restoring analyst, customer and investor confidence in Wells Fargo despite several calls for his firing from shareholder advisory groups and congressional leaders amid a continuing shakeup in the board’s composition.
“We’re getting close. We’re not in the eighth or ninth innings, but we’re making a lot of progress toward the end of the game,” Sloan said in an interview with the Winston-Salem Journal
“One of the things I reinforced to our team is once we get to the point of having addressed regulatory and other concerns, once we get to the ninth inning, just assume we’re going into extra innings.”
Sloan said those later innings will need to be dedicated to “keeping the focus on our customers, keeping up the pace of our investment, how quickly we make decisions, the pace of innovation.
“Because our competitive environment is going to continue to change. Providing assurance that we’re going to keep up this pace is really, really important.”
Wells Fargo’s board of directors cited March 15 in its comments regarding 2017 executive compensation that the bank had made “significant but incomplete progress on addressing compliance and operational risk-management issues.”
The bank has taken several self-inflicted reputation and financial blows since the scandal surfaced in September 2016.
On Sept. 1, 2017, the bank confirmed that at least 3.53 million potential checking and credit-card accounts were affected, up from the 2.1 million announced in September 2016.
The investigation extended March 2 into its wealth- and investment-management business, the bank said in its 2017 regulatory report. With Wells Fargo having major wealth- and investment-management operations in Winston-Salem and Charlotte, the investigation becomes the closest hands-on repercussion.
According to The Wall Street Journal, the U.S. Justice Department ordered the bank in late 2017 to investigate whistle-blower claims that wealth- and investment-management employees pushed nonessential products and services onto customers.
The bank said it “is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments or referrals of brokerage customers, to the company’s investment and fiduciary services business.”
In August 2017, Wells Fargo said it could experience overall losses reaching $3.3 billion in its attempt to resolve its scandals. That amount was lowered to $2.7 billion in the 2017 annual report.
On Feb. 2, the Federal Reserve said Wells Fargo wouldn’t be allowed to grow its total assets beyond the $1.93 trillion it had on Dec. 31. Those restrictions could require Wells Fargo to divest some businesses to avoid violating the total asset restrictions.
“In recent years, Wells Fargo pursued a business strategy that prioritized its overall growth without ensuring appropriate management of all key risks,” according to the Fed.
Sloan said it is “very complicated” to answer the question of how much progress the bank has made in regaining public trust.
“It really is a function of which stakeholder group you might be referring to,” Sloan said.
“For example, with our team members, we’ve made a fair amount of progress and are in the later innings.” He cited raising minimum hourly compensation to $15 an hour for about 36,000 employees — about 13.7 percent of its overall workforce — and several leadership changes.
Sloan said the bank plans to raise the salaries for another 50,000 employees who “were already at or around $15 an hour. ... That’s the next group that will be impacted.”
“I think the best measure for how our team members feel about the company is how they are acting with our customers.”
The 2017 American Customer Satisfaction Index for financial institutions, released Nov. 14, found Wells Fargo had slumped to last place among the 14 national and super-regional banks surveyed with a 74 score, down three points.
Index officials surveyed 17,861 customers between Oct. 1, 2016, and Sept. 16, 2017. The top score is 100.
Sloan stressed that “customer experience and loyalty scores are improving, and complaints are down, and the turnover of our team is down to its lowest level in seven years.”
With individual customers, Sloan acknowledged that “it’s really a mix, but we’re in the mid-to-late innings.”
“Some large wholesale corporate banking customers ... they don’t really want to talk about any of our challenges. They want to know what we’re going to do to help them succeed.”
Sloan said the hardest stakeholder group to address is some elements of the media and some elected officials “who like to use Wells Fargo, or any other company for that matter, as a bit of a political football from time to time.”
“I’m not sure it’s appropriate to say that you are in a game there, and I don’t know if we’ll ever satisfy some folks, and candidly we shouldn’t worry about it.”