Scharf states he became emotional as $1.95 trillion asset cap lifted

Focus shifts to growth in credit cards, financial investment banking

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Wells Fargo shares increase nearly 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK CITY, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a track record for sternness, but he said that when the bank was finally devoid of a $1.95 trillion property cap by regulators on Tuesday, he ended up being emotional.

"Everyone thinks that I'm this tough, tough person ... but it's been so long in the making, it's impacted so many individuals so adversely," Scharf stated. "All of an abrupt, it's like it's all been worth it and everyone's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to fix its deeply established problems from a fake-accounts scandal 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 choice to lift among Wells Fargo's last significant punishments this week has actually mostly closed that chapter in its history. It also seals Scharf's tradition after a grueling turnaround in which he revamped management, slashed headcount and shed businesses.

"I feel excellent," Scharf told Reuters in an extensive interview on Wednesday after being flooded by congratulatory messages from employees and equivalents at other banks.

He is turning his focus to development after serving nearly 6 years as Wells Fargo's fixer-in-chief. He plans to broaden further in credit cards and investment banking, while likewise purchasing wealth and business banking.

It will not broaden in mortgages, he said. The bank left much of those operations after they were beset by scandal.

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

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He installed brand-new management, slashed more than 55,000 tasks, exited unprofitable organizations and reworked the bank's threat management and controls. In an effort to transform its culture, he likewise revamped the company's performance evaluation procedure to enhance accountability.

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

"The pressure, by the method, for me - it doesn't disappear, it simply changes" from concentrating 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 probably have more fun."

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

REACTIONS

I feel great. I felt a little emotional yesterday. Everyone believes I'm this tough, tough individual, and I'm not really. It's been so long in the making, it's affected so lots of individuals so adversely. And I began getting notes instantly from everyone, but especially individuals who work here. I would state 80% of them, 75% of them were about their experience here over a time period and how proud they are now, and glad. Twenty percent were about the $2,000 (stock award) we were offering them.

Suddenly, it's like it's all been worth it and everybody's sensation it. It's everybody, and I truly do think that everybody who is here has been affected by the work. Some straight, since they had to do it, but even just people having to talk with 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 remaining companies that we have, with the minor exception of our mortgage organization, all have opportunities to grow and produce higher returns.

So it's true of the wealth business through commercial still true of CIB (corporate and financial investment banking), since despite the fact that we're seeing results and significant upside there, it's true in our company, and super significantly, it holds true in our consumer and small company banking business, where they were most impacted by the sales practice scandal. We're just introducing disciplines back to be able to serve customers more broadly and grow in manner ins which we have not had the ability to.

People always ask me, "What are the leading 3 priority locations for development?" And I attempt not to answer the concern, due to the fact that I really think every line of business has an opportunity.

ACQUISITIONS

Not on the short list today. At some time, capabilities around payments, around rewards, around the movement of securities, would we be ready to look at something like that? Sure. But we haven't even begun to believe about what that is. And we still have more work to do. We don't want to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some ways, it's an absolutely different company. The culture is various here, it's not a "me" culture. People desire to be dealt with fairly, they wish to be paid relatively, however they come here since they desire to work together. That is extremely important.

Reached a severe, it harmed us because we didn't make difficult decisions about people, we didn't challenge things. But I do believe a culture like that, in a well balanced method, is unbelievable to have. It takes a very long time to construct.

We have genuine responsibility in the organization, which's those that's favorable, that's unfavorable, however it likewise brings with it a strong desire to help individuals improve.

It's much more of a meritocracy. Nothing's ideal. We've still got a ways to go, however it drives performance. Every senior leader is expected to be involved in an in-depth method in both the method and the execution of their business strategy.

HEADCOUNT

We're adding lenders, sales individuals, relationship supervisors in the industrial bank, innovation resources. We're simply funding it through effectiveness that we're getting somewhere else. There's significant chances to end up being more efficient.

BUYBACKS AND DIVIDENDS

We've been purchasing a great deal of stock back, and I anticipate that we'll continue to buy stock back. So on the dividend, what we desire to be able to do is increase the profits capacity of the business (and) increase the dividend to keep a relatively consistent payment ratio. We want to be able to consistently increase the dividend at a reasonable level.

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

FUTURE PLANS

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

As tough as I have actually been working, we discover time to do the important things that enable us to restore.

I'm not going to work any less tough, I'm not going to feel any less pressure. I'll most likely have more fun.

INDUSTRY REACTION

I have actually spoken with practically all the big banks' CEOs congratulating us. When you're on the within these things, you know how difficult they actually are and what it takes. Folks have said it's great for the industry. A strong Wells Fargo, without those restrictions, enables Wells to be able to support development. And despite the fact that we're all very competitive, a strong U.S. is a great thing.

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