Scharf states he became emotional as $1.95 trillion possession cap raised

Focus shifts to development in charge card, investment banking

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Wells Fargo shares increase almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK CITY, 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 without a $1.95 trillion possession cap by regulators on Tuesday, he ended up being psychological.

"Everyone believes that I'm this hard, tough person ... but it's been so long in the making, it's affected so lots of people so adversely," Scharf stated. "All of a sudden, it's like it's all been worth it and everybody's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, swearing to repair its deeply entrenched problems from a fake-accounts scandal that emerged in 2016. The bank faced a public protest, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's choice to lift one of Wells Fargo's last significant penalties today has actually mostly closed that chapter in its history. It likewise cements Scharf's tradition after an intense turn-around in which he revamped management, slashed headcount and shed services.

"I feel fantastic," Scharf told Reuters in an extensive interview on Wednesday after being inundated by congratulatory messages from workers and counterparts at other banks.

He is turning his focus to growth after serving nearly six years as Wells Fargo's fixer-in-chief. He plans to broaden further in credit cards and financial investment banking, while likewise buying wealth and business banking.

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

As Wells Fargo intends to increase profits, it plans to raise its dividend to keep payments constant for investors, Scharf said. Share buybacks will continue, but their pace 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 installed brand-new management, slashed more than 55,000 jobs, exited unprofitable services and reworked the bank's danger management and controls. In an effort to transform its culture, he also remodelled the company's efficiency review procedure to improve accountability.

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

"The pressure, by the way, for me - it does not go away, it simply changes" from focusing on historical issues to future growth, Scharf stated. "I'm not going to work any less tough, 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 been modified for length and clearness.

REACTIONS

I feel fantastic. I felt a little emotional yesterday. Everyone believes I'm this hard, tough individual, and I'm not in fact. It's been so long in the making, it's impacted many people so negatively. And I started getting notes instantly from everyone, but 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 proud they are now, and happy. Twenty percent had to do with the $2,000 (stock award) we were providing.

Suddenly, it's like it's all been worth it and everybody's sensation it. It's everybody, and I really do think that everyone who is here has actually been impacted by the work. Some directly, because they needed to do it, but even simply individuals needing to talk with 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 expect that throughout all the remaining businesses that we have, with the slight exception of our mortgage organization, all have chances to grow and produce greater returns.

So it holds true of the wealth company through commercial still real of CIB (business and investment banking), due to the fact that although we're seeing outcomes and considerable upside there, it holds true in our company, and super notably, it holds true in our consumer and small company banking business, where they were most impacted by the sales practice scandal. We're simply introducing disciplines back to be able to serve clients more broadly and grow in ways that we haven't been able to.

People constantly ask me, "What are the leading 3 top priority locations for development?" And I attempt not to answer the concern, because I really believe every line of company has an opportunity.

ACQUISITIONS

Not on the list today. At some time, abilities around payments, around benefits, around the movement of securities, would we want to look at something like that? Sure. But we have not even started to consider 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 methods, it's a completely different company. The culture is different here, it's not a "me" culture. People desire to be treated fairly, they want to be paid relatively, however they come here since they want to interact. That is extremely crucial.

Reached a severe, it harmed us since we didn't make hard choices about individuals, we didn't face things. But I do believe a culture like that, in a balanced way, is extraordinary to have. It takes a very long time to develop.

We have genuine accountability in the organization, and that's those that's positive, that's negative, but it likewise brings with it a strong desire to assist people improve.

It's far more of a meritocracy. Nothing's ideal. We've still got a methods to go, however it drives efficiency. Every senior leader is anticipated to be associated with a detailed method both the method and the execution of their company strategy.

HEADCOUNT

We're adding lenders, sales individuals, relationship supervisors in the business bank, technology resources. We're simply funding it through efficiencies that we're getting somewhere else. There's significant opportunities to end up being more efficient.

BUYBACKS AND DIVIDENDS

We've been purchasing a lot of stock back, and I anticipate that we'll continue to buy stock back. So on the dividend, what we want to be able to do is increase the profits capacity of the company (and) increase the dividend to keep a reasonably constant payment ratio. We wish to have the ability to regularly increase the dividend at a sensible level.

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

FUTURE PLANS

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

As hard as I have actually been working, we find time to do the important things that permit us to restore.

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

INDUSTRY REACTION

I've spoken with practically 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 said it benefits the industry. A strong Wells Fargo, without those restrictions, permits Wells to be able to support growth. And although we're all extremely competitive, a strong U.S. is an advantage.

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