(Reuters) – Wells Fargo & Co board members are considering keeping interim Chief Executive Allen Parker in the job permanently even after saying they would seek an outsider to fill the role, according to two sources familiar with the board’s thinking.
FILE PHOTO: The sun rises behind a Wells Fargo building in El Paso, Texas, U.S., March 30, 2019. REUTERS/Lucas Jackson/File Photo
Parker, 64, was thrust into the position in March when former CEO Tim Sloan resigned abruptly, saying pressure from politicians and regulators had become a distraction in running the scandal-plagued bank.
Critics like U.S. Senator Elizabeth Warren, a Democratic presidential candidate, had argued Sloan’s 30-year tenure made him incapable of changing an internal culture that fueled a string of customer abuses.
Sloan was the second Wells Fargo CEO to depart following revelations in 2016 that employees had opened potentially millions of fake customers accounts. The fourth-largest U.S. bank has paid billions of dollars in fines and is still being investigated by various federal agencies.
The board had set a goal of hiring an outsider, with Chair Betsy Duke saying the position should attract the top talent in banking. Reuters reported in April the bank had hired search firm Spencer Stuart and was focused on finding female candidates.
But the external search has been complicated by concerns Wells Fargo could not pay the big dollars necessary to lure talent from competing banks. The board’s pick would also be subject to an unusual vetting by U.S. regulators.
Board members started warming up to the idea of keeping Parker after he made a good impression on stakeholders including regulators, investors and employees.
“He’s obviously exceeded expectations and that’s a credit to him,” said Steven Potter, CEO of executive recruiting firm Odgers Berndtson U.S.
Sources familiar with the board’s thinking said Parker has not been tainted by the scandal since he joined in 2017, the year after customer abuses first emerged. One of the sources said Parker’s two years at the bank have given him enough understanding of lingering problems to fix them quickly.
It could take months for the search committee to come to a final decision about who is the best person to lead the San Francisco-based bank. Comptroller of the Currency Joseph Otting would then need to privately review and sign off on that pick.
A spokeswoman for Wells Fargo declined to comment. Representatives from the Federal Reserve and the Office of the Comptroller of the Currency, the bank’s primary regulators, declined to comment.
Parker joined Wells Fargo as general counsel from law firm Cravath, Swaine & Moore, where he was partner in charge of managing the firms operations.
Through his work at the firm defending high-profile clients like former U.S. Secretary of State Henry Kissinger, he also developed relationships in Washington that will be helpful while navigating Wells Fargo’s regulatory problems.
At Wells Fargo, he has been focused on cleaning up existing issues and preventing them from spreading.
Parker spent his first two months as interim CEO meeting with regulators in Washington, employees in Charlotte, North Carolina, and investors in New York City.
He has said his priorities as interim CEO are to improve customer service, satisfy regulatory requirements and continue making operations more efficient.
At an investor conference last week, Parker said the bank had entered a new stage of understanding with regulators and that, based on his meetings, the relationships were more constructive than before.
“We are probably a little bit more attentive now to everything they’re saying,” he told investors. “And frankly, in some cases, they’ve been speaking with greater clarity.”
Still, with Parker at the helm the bank could face even more pressure from lawmakers who wanted to see an outsider, industry analysts said. Turning inside to find a successor could also make some investors feel the board was unable to find a desirable candidate interested in the job.
Since Parker became CEO, Wells Fargo created a new unit charged with working through the 14 regulatory consent orders the bank is operating under and expanded its board to include a director who has experience managing a bank.
Reporting by Imani Moise and Jessica DiNapoli in New York, Additional reporting by Pete Schroeder in Washington; Editing by Neal Templin and Meredith Mazzilli