Wells Fargo’s new CEO apologized Tuesday to employees for the bank’s sales scandal during a special meeting of workers at uptown’s Knight Theater, while also noting “weaknesses” within Wells’ culture that must be changed.
Tim Sloan, who was promoted to his position two weeks ago, told the roughly 700 employees at the town hall-style gathering he was “sorry for the pain you have experienced as team members as a result of our company’s failures.” Sloan said the work to restore trust in the bank could take years, and he called on employees to “demonstrate perseverance” and be “patient and strong.”
“I think it all begins with understanding where things broke down, and where we failed – as a culture, a company and as leaders,” Sloan, 56, said in prepared remarks obtained by the Observer. “And, honestly, we are still on the journey of figuring all of that out.”
The meeting marked the CEO’s first live, interactive video appearance broadcast internally for Wells’ employees since Sloan was named replacement to John Stumpf. Before Tuesday, Sloan had addressed the scandal to employees in company communications, including a prerecorded video.
In a new disclosure, Sloan announced Tuesday the company plans to use outside independent “culture experts” to help Wells understand where it has cultural weaknesses. He also said the bank plans to have an independent consultant review sales practices and “customer harm” in other lines of business, going beyond regulators’ requirement for such reviews in its community banking operations.
Wells Fargo agreed Sept. 8 to pay $185 million in fines over allegations of “widespread illegal” sales practices that dated to at least 2011. Regulators said bank employees, racing to meet aggressive sales goals, opened 2 million accounts that may not have been authorized by customers, spurring congressional hearings, further investigations and class-action lawsuits.
The bank said it picked Charlotte for Tuesday’s event because of the large number of workers it houses here. The San Francisco-based bank employs about 23,000 people across various business lines in the region, its biggest employment hub. Employees from those lines were invited to the Knight Theater and admitted on a first-come, first-served basis.
Eleven months ago, former CEO Stumpf addressed Charlotte employees in the same space, during one of the bank’s regular quarterly meetings broadcast live internally to employees.
In an interview with the Observer after that meeting, Stumpf dismissed accusations about unauthorized accounts at the center of a city of Los Angeles lawsuit filed in May 2015. That suit was resolved on Sept. 8.
“I disagree with some of the accusation or charges or suggestions in that matter,” Stumpf said at that time, adding that he was proud of the culture at the bank and that Wells has “zero interest in having a customer have a product or service that they did not want, did not know about.” Wells Fargo employees should think of themselves as “financial doctors” who offer products that help customers succeed financially, he said, adding: “Nothing is about (sales) goals.”
The 63-year-old Stumpf retired Oct. 12 amid mounting criticism over the scandal – a stunning end to a more than three-decade career with the company.
Objective: ‘Restore trust’
Sloan’s appearance in Charlotte, scheduled from 2:30 to 4 p.m., included a panel discussion with other senior leaders – including Mary Mack, the new Charlotte-based head of community banking, and David Carroll, the Charlotte-based head of wealth and investment management.
Other executives on hand were the bank’s chief financial officer, its commercial capital group head and its head of payments, virtual solutions and innovation. Reporters were not invited. Wells Fargo said Sloan plans to hold similar meetings elsewhere in the U.S. with employees in the coming months.
In addition to repairing the bank, Sloan is tasked with proving to some analysts and elected officials that he’s the right person for the job.
A 29-year Wells veteran, Sloan served as the bank’s chief financial officer from 2011 to 2014. In November, he was named president and chief operating officer, a move that resulted in community banking head Carrie Tolstedt reporting to Sloan until she left the company in September.
In a letter last week to the bank’s chairman, U.S. Sens. Elizabeth Warren and Robert Menendez said it was “difficult to believe” Sloan had no knowledge of accounts being opened without customers’ knowledge.
In his prepared remarks Tuesday, Sloan said: “Our senior leadership is committed – and I am personally committed – to taking the decisive actions and to learning the necessary lessons to ensure our company and our customers are never susceptible to the kinds of behaviors and failures that got us to where we are today.
“My primary objective is to restore trust in Wells Fargo – restore pride in our company and mission,” he said. “That may seem like a long ways off today, but I promise you we will.”
Sloan, who lives in the Los Angeles area but has an office in San Francisco, outlined for employees steps the bank has previously disclosed to improve practices and rebuild trust, such as eliminating product sales goals for retail bankers. But, he noted, the bank’s culture has “weaknesses within it that we must change.”
The CEO told employees they “are not the people and company that has been portrayed in the news and social media.” But the bank is also “not in denial about our reality,” he said.
“Things went wrong. Problems need to be fixed. Customers and team members were harmed and need to be cared for. And a better and stronger Wells Fargo must emerge out of all of this.”
He defended the bank’s values, saying Wells’ failures were not the result of its values but, instead, “some of us forgetting to be guided by them.”
Sloan said the job ahead will be “for our entire company – not just for the community bank.” The lost of trust “has affected all of us, so the effort to restore it needs to involve all of us, too.”
“Wells Fargo’s great reputation has been an enormous asset for all of us and it will take all of us to restore it,” he said.
That means, Sloan said, employees being “champions and stewards” for the bank, its brand and its reputation. Two ways employees can help immediately include addressing customers’ concerns and getting “engaged in understanding our reality and how we’re moving forward.”
“We need to come together, as one team and one company,” Sloan said. “And how quickly we do will determine how quickly we can win back the trust we lost and become the stronger and better Wells Fargo we must become.”