(Reuters) – Wells Fargo & Co’s plan to bring in an outsider as its next chief executive could give the scandal-plagued bank a much needed fresh start, but a turnaround will not be easy for whoever takes the helm, analysts said.
The fourth-largest U.S. bank by assets said on Thursday that CEO Tim Sloan, a 31-year Wells Fargo veteran, would resign immediately and a committee would meet on Friday to start looking for a replacement from outside the bank.
Years - Sales - Practices - Scandal - Light
More than two years after its wide-ranging sales practices scandal first came to light, Wells Fargo is still struggling to repair its reputation and relationship with U.S. regulators.
“Reforming decades of past mistakes at an institution as large as Wells is a difficult and time-consuming endeavor,” said Morningstar analyst Eric Compton in a note on Friday.
Wells - Fargo - Shares - Percent - Friday
Wells Fargo shares were down 2.2 percent to $48.02 on Friday, after jumping more than 2.7 percent after the bank announced Sloan’s resignation on Thursday.
Investors are pondering what the change in leadership will actually mean for the bank over the next year or two, Marty Mosby, an analyst at Vining Sparks IBG, said in a note on Friday.
Transition - Period - Ramifications - Years - Mosby
“The intermediate transition period will not likely be as productive as we had been assuming, and the longer-term ramifications won’t be played out for years,” Mosby said.
Admissions by the bank that it opened potentially millions of unauthorized accounts and improperly charged customers for services have resulted in billions of dollars in fines and settlements since 2016.
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The Federal Reserve has also placed an unprecedented restriction on Wells Fargo to keep it from growing its balance sheet until it proves risk management controls are improved.
“It does seem that Wells Fargo management has lost the confidence of regulators,” Minneapolis Federal Reserve President Neel Kashkari told Reuters on Friday. “It will be important to put in...
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