When Wells Fargo agreed to buy Wachovia in fall 2008, investment bankers who worked for the Charlotte-based company began printing their resumes and drawing up exit plans.
San Francisco-based Wells wasn’t a big player in Wall Street-style services such as advising corporate clients on deals or stock offerings. So the Wachovia bankers feared the acquiring bank would ax their high-priced posts, leaving them scrambling for work in a dire job market.
The Wells Fargo executive who helped calm their fears – and who ultimately kept the business largely intact – was little known outside the company but seen internally as a rising star: Tim Sloan.
On Wednesday, the 56-year-old rose to the top job at the nation’s No. 3 bank by assets after CEO John Stumpf stepped down over an unauthorized-accounts scandal in the retail bank.
Sloan faces major challenges in the new role, but former Wachovia bankers said he was a good pick for the company and potentially for Charlotte, where the investment bank has its biggest hub.
“He was the first person that we all met, and it was at a time of great uncertainty for the investment bank,” said a former Wachovia banker who joined Wells in the merger. “Tim was very objective. He was a great listener. He ultimately became a strong advocate for the business and his judgment paid off for Wells.”
A Midwesterner who earned undergraduate and graduate degrees from the University of Michigan, Sloan joined Wells Fargo in 1987 and by the time of the Wachovia deal was one of the top executives in the wholesale bank that served large corporations.
After Wachovia verged on collapse during the financial crisis, the government initially brokered a deal for Citigroup to buy the Charlotte bank in September 2008. But Wells swooped in days later with a more favorable offer. Sloan helped analyze Wachovia’s commercial business before the bank sealed the deal.
Soon after the acquisition was announced, Sloan visited Charlotte, meeting with the top ranks of the corporate and investment bank. He talked individually with executives about their businesses and then went out to dinner with the group at the now-defunct Aquavina restaurant on The Green in uptown.
“Tim made it very clear that this was something that was going to be very carefully evaluated,” said the former Wachovia banker, who like others interviewed for this story spoke on the condition of anonymity to protect business relationships. “He reassured us this was going to be a very fair analysis.”
Sloan remained based on the West Coast, but he was accessible and willing to meet with corporate clients in Charlotte and around the country, bankers said.
“He was very active going out to clients,” said another former Wachovia banker who later worked under Sloan. “We could get him in front of CEOs. He enjoyed meeting with clients, and it made a difference. I was very happy to have him in that chair because I thought he would be responsive to our immediate needs.”
Another banker said he made a strong impression by calling Wachovia bankers who had decided to leave the company for other jobs, encouraging them to stay and telling them they would be welcomed back if they changed their minds.
Although Wachovia had the much bigger investment banking operation, he didn’t run into much friction with the newly acquired staff. That’s because, at the time, Wells had clearly emerged as the stronger institution in the financial crisis.
“We had lost,” said one banker.
It also helped when, in January 2009, Wells named two Wachovia veterans to lead the combined company’s investment banking and capital markets group, Jonathan Weiss and Rob Engel, reporting to Sloan. In an interview with the Observer at the time, Sloan said Wells was excited to add new capabilities.
“To provide additional products and services is a great opportunity,” he said.
Slashed bonuses, layoffs
Still, there were difficult moments for Sloan in his new job.
In December 2008, he joined a conference call with executives to tell them that the bonus pool for Wachovia employees had been significantly reduced, a decision made by Wachovia’s then-CEO Bob Steel. Sloan said he was sorry and “we’re going to build from here,” one of the former Wachovia bankers said.
And in May 2009, Wells announced 548 layoffs in uptown Charlotte, a significant portion of which were in the investment bank.
Even after naming former Wachovia executives to top jobs, Sloan had to contend with ongoing concerns about the company’s commitment to the business.
In a client meeting in San Francisco in early 2009 with senior executives of a retail company, then-Wells Fargo Chairman Dick Kovacevich made a remark dismissive of the investment banking business, said a source familiar with the matter. The rumor spread that Wells Fargo was looking to get out of the business, but Sloan worked to tamp down fears, including calling a senior banker at home on a Sunday night, this person said.
Kovacevich, who stepped down as chairman at the end of 2009, told the Observer via email that he doesn’t recall the incident at all. He said he “totally supported” the decision by Sloan and then-wholesale banking head Dave Hoyt to “keep the investment banking arm of Wachovia and have worked with that team ever since when asked to do so.”
He did not respond to questions about the CEO change at the bank.
While Sloan wasn’t steeped in every aspect of the business, he was a quick study and saw the potential in offering new services to corporate clients, bankers said. In 2015, investment banking contributed $1.8 billion in revenue at Wells, about 7 percent of revenue in the wholesale bank.
“He’s a very smart guy,” said one banker. “And he’s willing to push the organization in ways that are constructive when it needs to be pushed.”
Starting in 2010, Sloan moved on to a succession of new assignments: chief administrative officer, chief financial officer and head of the entire wholesale bank. In November 2015, he rose to president and chief operating officer, emerging as Stumpf’s heir apparent.
Sloan’s promotion to CEO came after Wells agreed last month to pay $185 million in fines to settle allegations that employees in the retail bank opened more than 2 million unauthorized accounts to meet aggressive sales goals. In the previous weeks, lawmakers from both parties grilled Stumpf on Capitol Hill, the bank’s board stripped him of $41 million in stock holdings, and federal prosecutors and others opened probes of the bank.
Analysts have said Sloan is a good choice because he came up through the wholesale bank, not the tarnished retail unit. Still, he sat in the upper ranks of the company for years and later had oversight of the retail segment when he became president, which could subject him to new scrutiny. Some analysts have questioned whether an insider is the right person to reform the company.
But if he succeeds in the job, it could prove beneficial to a part of the company centered in Charlotte.
At the time of Wachovia acquisition, “there was a lot of consternation that they weren’t buying Wachovia for the investment bank,” said a former Wachovia banker now with a competitor. “Not only did they keep it, but they have been gradually growing it, and I think it’s been great for Charlotte.”