Wells Fargo goes outside to reform internal culture that led to abuses
Wells Fargo & Co. has jettisoned a longtime strategy of growing its own leaders in favor of importing them as part of the effort to clean up its image.
The San Francisco-based firm hired Steve Troutner — a veteran of Citigroup Inc., Bank of America Corp. and Wachovia — to lead the community bank’s U.S. Western region. And it brought in Nyron Latif from Goldman Sachs Group Inc. as the head of operations for Jon Weiss’ wealth and investment management unit.
The appointments, announced this week, are the latest of more than 10 big-ticket outside hires over the last two years as the bank works to prove to regulators, investors and the public that it has changed after a rash of consumer abuses came to light. Until now, Wells Fargo had historically promoted from within.
“For their credibility and for their standing in customers’ eyes — in anyone’s eyes — it has to be fresh blood,” Jeanne Branthover, a managing partner at New York-based executive search firm DHR International, said in an interview. “It has to be new people that are not connected to this institution that has had scandal after scandal after scandal.”
Earlier this month, the bank announced that Saul Van Beurden would join from JPMorgan Chase & Co. as the head of technology, landing him on the operating committee as a direct report to Chief Executive Tim Sloan. He joins Chief Risk Officer Amanda Norton, general counsel Allen Parker and human resources head David Galloreese as the outside additions to the 10-person leadership team over the last two years.
“Wells Fargo’s outstanding leadership team benefits from both external talent with fresh insights and perspective and internal talent with deep knowledge of the company,” spokesman Ancel Martinez said in an emailed statement.
The scandals erupted in 2016 on the revelation that bank employees had opened as many as 3.5 million bogus accounts without customers’ knowledge, in an effort to meet sales quotas. The practice was first reported in 2013 by the Los Angeles Times. Before then, operating committee members worked at the bank for a median of 28.5 years. Now, that number is 16 years and likely to go down as the chief auditor position on the committee is still open.
Last year, Wells Fargo also brought in Sarah Dahlgren, a McKinsey alum and former regulator, to lead regulatory relations, and three outside hires to beef up lobbying. The jobs are central to the firm’s navigation of regulatory scrutiny, including a Federal Reserve-imposed asset cap, and as it works to improve its image with lawmakers.
Also among Wells Fargo’s recent outside hires: Lisa Frazier, who has worked at Commonwealth Bank of Australia and McKinsey, to lead innovation within the tech payments unit, and Chief Compliance Officer Mike Roemer from Barclays. Both joined last year.
For Wells Fargo employees who have devoted their careers to the bank with the goal of rising to the top — a la current CEO Sloan — the bank’s new strategy may prove worrisome. Branthover said the question now is: How does Wells Fargo recruit from outside while maintaining credibility internally?
“It wouldn’t surprise me to see people exiting due to lack of career [mobility] and growth,” Branthover said.
Levitt writes for Bloomberg.
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