April 26, 2019
By Jessica DiNapoli and Imani Moise
NEW YORK (Reuters) – Wells Fargo & Co’s board has retained executive search firm Spencer Stuart to hunt for a new chief executive, ideally a woman who can tackle its regulatory and public perception issues, two people familiar with the matter said.
Wells Fargo’s ambition to become the only major U.S. bank with a female CEO underscores the need to restore its image with a wide range of constituents, including customers, shareholders, regulators and politicians, after it became mired in a scandal in 2016 for opening potentially millions of unauthorized accounts.
Former CEO Tim Sloan left abruptly last month, becoming the second CEO to leave the bank in the scandal’s fallout.
The board plans to approach Citigroup Inc’s Latin America chief Jane Fraser, one of the sources said. During Fraser’s 15-year tenure at Citigroup, she has gained experience running consumer and commercial businesses as well as its private bank.
Fraser could not be immediately reached for comment.
The board also discussed approaching JPMorgan Chase & Co’s Marianne Lake, but after the bank named her to run JPMorgan’s consumer lending business last week, that option became less viable, the source added. The board wants someone who can convince regulators, employees, investors and customers that the bank has fixed problems underpinning the sales scandal, the sources said.
The bank’s board feels that choosing a woman might please lawmakers in Washington who have been critical not only of Wells Fargo’s misbehavior, but of the broader banking industry for a lack of diversity and gender equality, said the sources, who spoke on the condition of anonymity.
It also believes that such a move could bolster Wells Fargo’s image with the households of customers where women play a leading role in managing finances, one of the sources added.
The new CEO will also have to resolve litigation and regulatory matters. There are 14 outstanding consent orders with government entities, as well as probes by the U.S. Securities and Exchange Commission, the Department of Labor and the Department of Justice.
To be sure, Spencer Stuart will approach and consider several male candidates for the CEO job as well, one of the sources said. The top priority is to find an external candidate who can navigate the bank’s regulatory issues, the source added.
Finding an outsider who meets all those qualifications and wants the job will be difficult, the sources said. There are few people with the necessary experience, even fewer of those who are women, and it is not clear if any of the obvious candidates would be open to taking the role.
The sources asked not to be identified because Wells Fargo’s board deliberations are confidential.
Spokespeople for Wells Fargo and Spencer Stuart declined to comment.
Wells Fargo’s board has not made any public statements about its requirements for a new CEO, beyond Chair Betsy Duke saying the job should attract the “top talent in banking.”
The board wants to complete the search within the next three to six months, one of the sources said.
After Sloan’s ouster, Wells Fargo’s board appointed Allen Parker, who had been general counsel, as interim CEO. The board has said it is looking for an external candidate as a permanent replacement. It is not clear whether Parker will stay at the bank.
Others whose names have been mentioned by analysts, recruiters and industry sources as perspective CEO candidates include Alphabet Inc finance chief Ruth Porat and Bank of America Corp’s chief technology officer Cathy Bessant.
Wells Fargo shares have stalled since Sloan’s departure on March 29th, while the KBW Bank index has rallied more than 7 percent.
Wells Fargo would be “the best stock on earth to buy” if it had the right CEO, said Greg Donaldson, chairman of Donaldson Capital Management in Indiana.
Donaldson held about 50,000 Wells Fargo shares, but sold the stake last year as problems mounted. The CEO change could convince him to re-invest, depending on who it is, he told Reuters.
“It would be very smart for them to get a woman,” he said.
(Reporting by Jessica DiNapoli and Imani Moise in New York; Editing by Lauren Tara LaCapra, Greg Roumeliotis and Susan Thomas)