Wells Fargo expects swift rebound after scandal

Wells Fargo reported earnings of $5.6 billion in the 3rd quarter of 2016.

That’s a slight drop from the same time last year and comes as the company is trying to work its way through a growing scandal over fraudulent sales practices among thousands of employees who set up unauthorized accounts in clients’ names in order to meet sales goals.

Senior management should have and could have done more to prevent it from happening, the company’s new CEO Tim Sloan said Friday in a conference call with reporters.

"We let down our customers, our shareholders and our team members," Sloan said.
"As the new CEO, my immediate and highest priority is to restore trust in Wells Fargo."

Wells Fargo officials said since the scandal became known to the public, it has eliminated product sales goals and contacted customers who had accounts opened in their names without their knowledge.

Sloan announced the company is going further to restore credibility by hiring an independent company to use mystery shoppers to make 15,000 to 20,000 visits to branches to make sure customers aren’t being taken advantage of.

“We had serious problems in our retail bank where products became the focus rather than relationships without customers,” Sloan said.

Sloan took over this week after former CEO John Stumpf announced he was retiring immediately in an effort to allow the bank to move forward through the controversy.

Nearly all of Wells Fargo’s senior management team is based at the company’s headquarters in San Fransisco.

However, banking expert Tony Plath said the scandal could give a more influential voice to top leaders in Charlotte.

He mentioned specifically David Carroll, an executive with Wachovia prior to its takeover by Wells Fargo, who now runs the bank’s Wealth Management Division out of uptown Charlotte.

“If anything good comes out of this, it may be that it elevates the credibility and stature and the responsibility of the people that are former Wachovia people at Wells Fargo,” Plath said.

Wells Fargo in Charlotte employs 23,000, the largest in the company’s system.

Sloan has said he expects the bank’s employee base to grow.

Friday, he also admitted the bank’s recovery from this scandal won’t be easy.

“It’s going to take a while,” Sloan said. “As we said, it could get a little bit worse before it gets better.”

Cox Media Group