Scharf says he ended up being psychological as $1.95 trillion possession cap lifted
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Focus shifts to growth in credit cards, 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 understands he has a reputation for sternness, but he said that when the bank was lastly devoid of a $1.95 trillion asset cap by regulators on Tuesday, he ended up being emotional.

"Everyone thinks that I'm this hard, hard person ... however it's been so long in the making, it's affected many people so adversely," Scharf said. "Suddenly, it's like it's all deserved it and everyone's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, swearing to repair its deeply established problems from a fake-accounts scandal that appeared in 2016. The bank faced a public protest, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's decision to raise one of Wells Fargo's last significant penalties today has actually mostly closed that chapter in its history. It likewise cements Scharf's legacy after an intense turn-around in which he revamped management, slashed headcount and shed businesses.

"I feel terrific," Scharf told Reuters in a wide-ranging interview on Wednesday after being inundated by congratulatory messages from staff members and equivalents at other banks.

He is turning his focus to development after serving nearly six years as Wells Fargo's fixer-in-chief. He plans to expand even more in credit cards and investment banking, while also investing in wealth and industrial banking.

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

As Wells Fargo aims to increase incomes, it prepares to raise its dividend to keep payments constant for investors, Scharf said. Share buybacks will continue, however their pace will most likely slow as the bank buys growth, he said.

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his two predecessors were ousted. He installed new management, slashed more than 55,000 tasks, left unprofitable businesses and reworked the bank's danger management and controls. In an effort to transform its culture, he likewise revamped the business's performance evaluation procedure to boost responsibility.

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

"The pressure, by the way, for me - it doesn't disappear, it simply changes" from focusing on historical issues to future development, Scharf said. "I'm not going to work any less difficult, I'm not going to feel any less pressure, I'll most likely have more enjoyable."

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

REACTIONS

I feel excellent. I felt a little emotional yesterday. Everyone thinks I'm this tough, tough person, and I'm not in fact. It's been so long in the making, it's affected a lot of people so negatively. And I began getting notes instantly from everyone, however 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 grateful. Twenty percent were about the $2,000 (stock award) we were providing.

All of an unexpected, it's like it's all been worth it and everyone's feeling it. It's everybody, and I really do think that everybody who is here has been affected by the work. Some straight, due to the fact that they needed to do it, however even just people having to talk 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 expect that throughout all the remaining organizations that we have, with the slight exception of our mortgage organization, all have opportunities to grow and produce higher returns.

So it holds true of the wealth business through commercial still real of CIB (business and financial investment banking), because even though we're seeing results and considerable upside there, it holds true in our business, and very significantly, it holds true in our customer and small company banking service, where they were most affected by the sales practice scandal. We're simply introducing disciplines back to be able to serve clients more broadly and grow in methods that we have not had the ability to.

People always ask me, "What are the leading 3 top priority locations for development?" And I try not to address the question, due to the fact that I actually believe every industry has an opportunity.

ACQUISITIONS

Not on the brief list right now. At a long time, abilities around payments, around rewards, around the movement of securities, would we want to take a look at something like that? Sure. But we haven't even started to consider what that is. And we still have more work to do. We do not wish 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" . People wish to be treated relatively, they want to be paid relatively, but they come here due to the fact that they wish to interact. That is extremely crucial.

Reached an extreme, it hurt us due to the fact that we didn't make difficult decisions about individuals, we didn't challenge things. But I do think a culture like that, in a balanced method, is unbelievable to have. It takes a long period of time to construct.

We have real accountability in the company, and that's those that's positive, that's unfavorable, however it also brings with it a strong desire to help individuals get better.

It's much more of a meritocracy. Nothing's best. We've still got a methods to go, but it drives performance. Every senior leader is expected to be associated with an in-depth way in both the strategy and the execution of their business plan.

HEADCOUNT

We're adding lenders, sales individuals, relationship managers in the commercial bank, innovation resources. We're simply funding it through efficiencies that we're getting in other places. There's substantial opportunities to end up being more effective.

BUYBACKS AND DIVIDENDS

We have actually been buying a great deal of stock back, and I anticipate that we'll continue to purchase stock back. So on the dividend, what we desire to be able to do is increase the earnings capability of the business (and) increase the dividend to keep a relatively consistent payout ratio. We want to have the ability to consistently increase the dividend at a sensible 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 have actually been working, we discover time to do the 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 have actually spoken with almost all the big banks' CEOs congratulating us. When you're on the within these things, you understand how tough they really are and what it takes. Folks have stated it benefits the market. A strong Wells Fargo, without those restraints, permits Wells to be able to support growth. 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 City; Editing by Matthew Lewis)
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