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

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

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a credibility for sternness, but he said that when the bank was lastly without a $1.95 trillion possession cap by regulators on Tuesday, he became emotional.

"Everyone believes that I'm this tough, hard person ... but it's been so long in the making, it's impacted many individuals so negatively," Scharf said. "All of a sudden, it resembles it's all deserved it and everyone's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, swearing to fix its deeply entrenched issues from a 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 lift one of Wells Fargo's last major punishments today has actually mostly closed that chapter in its history. It also seals Scharf's tradition after a grueling turnaround in which he upgraded management, slashed headcount and shed companies.

"I feel great," Scharf told Reuters in an extensive interview on Wednesday after being flooded 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 expand even more in credit cards and financial investment banking, while likewise buying wealth and commercial banking.

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

As Wells Fargo aims to increase incomes, it plans to raise its dividend to keep payouts consistent for financiers, Scharf stated. Share buybacks will continue, but their pace will most likely slow as the bank invests in development, he stated.

Scharf, who formerly 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 tasks, left unprofitable companies and revamped the bank's danger management and controls. In an effort to transform its culture, he also reworked the company's performance evaluation process to increase responsibility.

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

"The pressure, by the method, for me - it doesn't go away, it just alters" from concentrating on historic problems to future development, Scharf said. "I'm not going to work any less tough, I'm not going to feel any less pressure, I'll probably have more enjoyable."

Below is a records of Reuters' interview with Scharf, which has been edited for length and clearness.

REACTIONS

I feel terrific. I felt a little emotional the other day. Everyone thinks I'm this hard, hard person, and I'm not actually. It's been so long in the making, it's impacted many people so adversely. And I began getting notes instantly from everybody, however especially people who work here. I would say 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 thankful. Twenty percent were about the $2,000 (stock award) we were providing them.

Suddenly, it resembles it's all deserved it and everybody's sensation it. It's everyone, and I truly do believe that everybody who is here has actually been affected by the work. Some straight, because they needed to do it, however even just people 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 staying companies that we have, with the small exception of our mortgage service, all have chances to grow and produce higher returns.

So it holds true of the wealth company through commercial still true of CIB (corporate and financial investment banking), since even though we're seeing results and substantial upside there, it holds true in our business, and very significantly, it holds true in our customer 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 clients more broadly and grow in methods that we haven't been able to.

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

ACQUISITIONS

Not on the list right now. At a long time, capabilities around payments, around benefits, around the motion of securities, would we be ready to take a look at something like that? Sure. But we haven't even begun to consider what that is. And we still have more work to do. We do not want 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 want to be treated fairly, they wish to be paid relatively, but they come here since they wish to work together. That is incredibly essential.

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

We have genuine accountability in the company, and that's those that's favorable, that's unfavorable, however it also brings with it a strong desire to help people improve.

It's a lot more of a meritocracy. Nothing's ideal. We have actually still got a ways to go, but it drives performance. Every senior leader is anticipated to be associated with a detailed method both the technique and the execution of their business strategy.

HEADCOUNT

We're including bankers, sales individuals, relationship managers in the business bank, innovation resources. We're just moneying it through performances that we're getting elsewhere. There's considerable opportunities to end up being more effective.

BUYBACKS AND DIVIDENDS

We have actually been purchasing a great deal of stock back, and I prepare for 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 company (and) increase the dividend to keep a reasonably constant payment ratio. We hope to be able to regularly increase the dividend at a reasonable level.

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

FUTURE PLANS

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

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

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

INDUSTRY REACTION

I have actually spoken with just about all the big banks' CEOs congratulating us. When you're on the within of these things, you understand how hard they really are and what it takes. Folks have stated it's great for the industry. A strong Wells Fargo, without those constraints, allows Wells to be able to support growth. And although we're all very competitive, a strong U.S. is a good thing.

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