Tuesday 25 October 2016

Wells Fargo chief John Stumpf resigns after bank rocked by sales scandal

Published 13/10/2016 | 09:25

Wells Fargo CEO John Stumpf has resigned (AP)
Wells Fargo CEO John Stumpf has resigned (AP)

John Stumpf, the embattled chief executive of Wells Fargo, has resigned with immediate effect after the US bank admitted that staff opened unauthorised accounts for several years to meet sales targets.

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Mr Stumpf, who led Wells Fargo since 2007 and steered the bank through the financial crisis, will also step down as the bank's chairman, the company said last night.

Tim Sloan, the bank's chief operating officer, will succeed Mr Stumpf as chief executive.

US regulators fined Wells Fargo $185m (£150m) last month over allegations that staff opened accounts, transferred funds and submitted credit card applications on behalf of customers without their knowledge or consent.

The scandal, which stretches back to "at least" 2011, caused public outcry and resulted in the bank firing 5,300 employees for misconduct.

Wells Fargo also announced last month that Mr Stumpf would forfeit $41m in share awards as well as his annual bonus.

In a statement last night, Mr Stumpf said: "While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside."

Mr Stumpf was hauled before the US Senate Banking Committee last month where senators branded him "gutless" and demanded his resignation.

The US bank chief accepted "full responsibility" for the scandal, and told the Senate that he was "deeply sorry" that Wells Fargo had "let our customers down".

He said last month: "This is not good for our customers and that is not good for our business. "I accept full responsibility for all unethical sales practices in our retail banking business, and I am fully committed to fixing this issue, strengthening our culture and taking the necessary actions to restore our company's trust."

In a statement last night, Mr Sloan said: "John Stumpf has dedicated his professional life to banking, successfully leading Wells Fargo through the financial crisis and the largest merger in banking history, and helping to create one of the strongest and most well-known financial services companies in the world.

"However, he believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the company forward."

Stephen Sanger, a bank director, will serve as the board's non-executive chairman. Elizabeth Duke, an independent director, will serve as vice chairman.

Wells Fargo has refunded $2.6m to affected customers and has pledged to end the sales practices that have been blamed for the abuses.

The bank's shares climbed by 1.5pc to $46 in extended trading after the bank announced Mr Stumpf's resignation.

The shares plunged by more than 10pc after the scandal was made public, pushing it below JPMorgan into second place in terms of market value.


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