Scharf says he became psychological as $1.95 trillion asset cap raised

Focus shifts to development in credit cards, financial investment banking

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Wells Fargo shares rise almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf understands he has a reputation for sternness, but he stated that when the bank was finally without a $1.95 trillion property cap by regulators on Tuesday, he ended up being psychological.

"Everyone believes that I'm this tough, hard individual ... however it's been so long in the making, it's affected numerous individuals so adversely," Scharf said. "All of a sudden, it resembles it's all been worth it and everybody's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, promising to fix its deeply established problems from a fake-accounts scandal that appeared in 2016. The bank dealt with a public protest, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's choice to raise one of Wells Fargo's last major penalties today has actually largely closed that chapter in its history. It also seals Scharf's legacy after an intense turnaround in which he overhauled management, slashed headcount and shed companies.

"I feel excellent," Scharf informed Reuters in a wide-ranging interview on Wednesday after being swamped by congratulatory messages from employees and counterparts at other banks.

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

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

As Wells Fargo intends to increase incomes, it plans to raise its dividend to keep payments constant for investors, Scharf said. Share buybacks will continue, however their pace will most likely slow as the bank purchases development, he stated.

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He set up brand-new leadership, slashed more than 55,000 jobs, left unprofitable services and revamped the bank's danger management and controls. In an effort to change its culture, he also revamped the company's efficiency review procedure to improve accountability.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having actually climbed up more than 8% so far this year as investors became more optimistic about the bank shedding its regulatory luggage.

"The pressure, by the way, for me - it does not disappear, it just changes" from concentrating on historic issues to future growth, Scharf stated. "I'm not going to work any less tough, I'm not going to feel any less pressure, I'll probably have more enjoyable."

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

REACTIONS

I feel terrific. I felt a little emotional the other day. Everyone thinks I'm this difficult, tough individual, and I'm not in fact. It's been so long in the making, it's impacted many people so adversely. And I started getting notes instantly from everybody, but particularly people who work here. I would state 80% of them, 75% of them were about their experience here over an amount of time and how proud they are now, and grateful. Twenty percent had to do with the $2,000 (stock award) we were giving them.

Suddenly, it's like it's all deserved it and everyone's sensation it. It's everyone, and I truly do think that everyone who is here has been affected by the work. Some straight, because they needed to do it, but even simply people needing to talk with their family and friends 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 throughout all the remaining organizations that we have, with the small exception of our mortgage company, all have chances to grow and produce higher returns.

So it holds true of the wealth organization through commercial still true of CIB (corporate and financial investment banking), because although we're seeing outcomes and significant upside there, it holds true in our business, and extremely importantly, it holds true in our customer and little company banking company, where they were most affected by the sales practice scandal. We're just presenting disciplines back to be able to serve customers more broadly and grow in manner ins which we have not been able to.

People constantly ask me, "What are the leading 3 priority areas for development?" And I try not to answer the question, due to the fact that I actually believe every industry 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 prepared to look at something like that? Sure. But we haven't even started to think of what that is. And we still have more work to do. We don't wish to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a totally various company. The culture is various here, it's not a "me" culture. People wish to be treated fairly, they desire to be paid fairly, but they come here since they wish to work together. That is extremely important.

Carried to a severe, it hurt us since we didn't make tough choices about individuals, we didn't face things. But I do think a culture like that, in a balanced method, is unbelievable to have. It takes a very long time to construct.

We have genuine accountability in the company, which's those that's positive, that's negative, however it also brings with it a strong desire to help people get much better.

It's a lot more of a meritocracy. Nothing's perfect. We've still got a methods to go, however it drives efficiency. Every senior leader is anticipated to be included in a detailed method in both the method and the execution of their business plan.

HEADCOUNT

We're adding bankers, sales individuals, relationship supervisors in the business bank, innovation resources. We're just moneying it through efficiencies that we're getting somewhere else. There's significant chances to end up being more effective.

BUYBACKS AND DIVIDENDS

We have actually been purchasing a lot of stock back, and I prepare for that we'll continue to buy stock back. So on the dividend, what we wish to be able to do is increase the revenues capacity of the business (and) increase the dividend to keep a relatively consistent payout ratio. We intend to have the ability to regularly increase the dividend at a reasonable level.

Hopefully we'll have more chances to invest inside business so we'll likely purchase less stock back than we had.

FUTURE PLANS

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

As tough as I have actually been working, we discover time to do the important things that permit 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 enjoyable.

INDUSTRY REACTION

I have actually spoken with almost all the huge banks' CEOs congratulating us. When you're on the inside of these things, you understand how difficult they actually are and what it takes. Folks have said it's excellent for the industry. A strong Wells Fargo, without those restrictions, allows Wells to be able to support development. And even though we're all very competitive, a strong U.S. is a good idea.

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