Wells Fargo & Co. Chief Executive Officer Tim Sloan gave in to critics and abruptly stepped down Thursday, after the 31-year company veteran struggled to tame a range of scandals, launching the fourth-largest U.S. bank into a hasty search for a successor.
Sloan, 58, will be replaced on an interim basis by the firm’s general counsel, C. Allen Parker. The board said it plans to look externally for a permanent replacement. The stock climbed in extended trading.
Ever since Sloan took the helm in 2016, he’s faced calls for his ouster from critics including Senator Elizabeth Warren, a Democrat running for president. They said a longtime insider couldn’t be counted on to clean up scandals emerging from the lender’s vast branch network and other divisions. Just last week, the board reiterated its support for Sloan. And hours before Thursday’s announcement, so did its top shareholder, Warren Buffett.
“They clearly have to regain their credibility,” said John Reed, who ran Citigroup Inc. until 2000. “You have to somehow behave in a way that causes the world to say, ‘OK, the past is behind them and they’re moving forward.’ And that’s a leadership issue. The fact that you would turn to a lawyer for something like that is not strange.”
Shares of Wells Fargo rose 3 percent at 6:10 p.m. in New York.
Ending ‘Distraction’
On a conference call after Thursday’s announcement, Sloan said he decided to leave because his presence was hurting the company. “It has become apparent that the focus on me has become a distraction that impacts our ability to successfully move Wells Fargo forward,” he said.
Board Chair Betsy Duke said the panel hasn’t yet spoken to any candidates.
The search for a successor won’t be simple. Recruiters and investors have said the pool of plausible replacements is shallow and the job description daunting, especially with the company still embroiled in probes. Finding an external candidate groomed to run such a large bank probably means poaching from just a few peers, such as JPMorgan Chase & Co. Yet paying enough to pry someone from a more stable situation risks a firestorm with the same critics who called for Sloan’s head.
In the meantime, Parker, 64, will be an unusual bank boss. He was a longtime lawyer for Cravath, Swaine & Moore LLP, one of Wall Street’s preeminent law firms, where he started in 1984 and was presiding partner before joining Wells Fargo in 2017. He was among more than 10 senior hires from outside the company as it sought to clean up its image.