Scharf states he ended up being emotional as $1.95 trillion property cap lifted

Focus shifts to development in credit cards, financial investment banking

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Wells Fargo shares rise almost 9% this year

By Nupur Anand, Lananh Nguyen

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

"Everyone believes that I'm this hard, difficult person ... however it's been so long in the making, it's affected so many individuals so negatively," Scharf said. "Suddenly, 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 established issues from a fake-accounts scandal that emerged in 2016. The bank dealt with a public protest, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's decision to raise one of Wells Fargo's last major penalties this week has actually largely closed that chapter in its history. It likewise cements Scharf's legacy after an intense turnaround in which he revamped management, slashed headcount and shed companies.

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

He is turning his focus to development after serving practically 6 years as Wells Fargo's fixer-in-chief. He prepares to expand further in charge card and financial investment banking, while also purchasing wealth and industrial banking.

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

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

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He set up brand-new leadership, slashed more than 55,000 tasks, left unprofitable services and remodelled the bank's danger management and controls. In an effort to transform its culture, he also reworked the company's performance evaluation procedure to enhance responsibility.

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

"The pressure, by the method, for me - it does not disappear, it simply changes" from concentrating on historical issues to future development, Scharf stated. "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."

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

REACTIONS

I feel fantastic. I felt a little psychological yesterday. Everyone thinks I'm this hard, difficult individual, and I'm not actually. It's been so long in the making, it's impacted so numerous people so negatively. And I began getting notes immediately from everyone, however especially individuals who work here. I would say 80% of them, 75% of them were about their experience here over a duration of time and how proud they are now, and appreciative. Twenty percent had to do with the $2,000 (stock award) we were providing them.

All of a sudden, it's like it's all deserved it and everybody's feeling it. It's everybody, and I really do believe that everybody who is here has actually been impacted by the work. Some directly, due to the fact that they needed to do it, but even simply 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 throughout all the staying organizations that we have, with the slight exception of our mortgage company, all have chances to grow and produce greater returns.

So it holds true of the wealth organization through commercial still real of CIB (business and investment banking), because even though we're seeing outcomes and significant upside there, it holds true in our business, and incredibly importantly, it holds true in our consumer and small organization banking service, where they were most affected by the sales practice scandal. We're simply presenting disciplines back to be able to serve clients more broadly and grow in manner ins which we haven't been able to.

People always ask me, "What are the top three top priority locations for growth?" And I try not to address the question, due to the fact that I actually think every line of work has an opportunity.

ACQUISITIONS

Not on the brief list right now. At a long time, capabilities around payments, around benefits, around the movement of securities, would we want to take a look at something like that? Sure. But we haven't even begun to think of what that is. And we still have more work to do. We do not desire to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a totally different company. The culture is various here, it's not a "me" culture. People want to be dealt with fairly, they wish to be paid relatively, however they come here because they wish to work together. That is incredibly essential.

Carried to a severe, it injured us since we didn't make hard choices about people, we didn't challenge things. But I do believe a culture like that, in a balanced method, is unbelievable to have. It takes a long time to develop.

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

It's a lot more of a meritocracy. Nothing's ideal. We've still got a ways to go, but it drives performance. Every senior leader is anticipated to be involved in a detailed method both the strategy and the execution of their company plan.

HEADCOUNT

We're adding lenders, sales individuals, relationship supervisors in the commercial bank, innovation resources. We're simply funding it through effectiveness that we're getting somewhere else. There's substantial opportunities to become more efficient.

BUYBACKS AND DIVIDENDS

We've been buying a lot of stock back, and I expect that we'll continue to purchase stock back. So on the dividend, what we wish to have the ability to do is increase the revenues capability of the business (and) increase the dividend to keep a fairly consistent payout ratio. We want to have the ability to regularly increase the dividend at a sensible level.

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

FUTURE PLANS

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

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

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.

INDUSTRY REACTION

I've heard from simply about all the huge banks' CEOs congratulating us. When you're on the within of these things, you understand how difficult they actually are and what it takes. Folks have stated it's good for the industry. A strong Wells Fargo, without those restrictions, enables Wells to be able to support growth. And even though we're all extremely competitive, a strong U.S. is a good idea.

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