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Scharf states he became psychological as $1.95 trillion possession cap lifted

Focus shifts to growth in credit cards, investment banking

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Wells Fargo shares rise nearly 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a credibility for sternness, but he stated that when the bank was finally without a $1.95 trillion property cap by regulators on Tuesday, he ended up being psychological.

"Everyone believes that I'm this tough, difficult person ... but it's been so long in the making, it's impacted many people so negatively," Scharf stated. "Suddenly, it's like it's all deserved it and everyone's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, pledging to fix its deeply established problems from a fake-accounts scandal that emerged in 2016. The bank dealt with a public protest, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's decision to lift one of Wells Fargo's last significant penalties today has actually mostly closed that chapter in its history. It also seals Scharf's tradition after a grueling turnaround in which he overhauled management, slashed headcount and shed businesses.

"I feel terrific," Scharf told Reuters in a comprehensive interview on Wednesday after being flooded by congratulatory messages from employees and equivalents at other banks.

He is turning his focus to development after serving practically six years as Wells Fargo's fixer-in-chief. He plans to broaden further in credit cards and investment banking, while likewise investing in wealth and industrial banking.

It will not expand in mortgages, he stated. The bank exited much of those operations after they were besieged by scandal.

As Wells Fargo aims to increase incomes, it prepares to raise its dividend to keep payments constant for financiers, Scharf said. Share buybacks will continue, however their speed will most likely slow as the bank invests in development, he stated.

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He set up brand-new leadership, slashed more than 55,000 jobs, left unprofitable businesses and revamped the bank's risk management and controls. In an effort to transform its culture, he also reworked the company's performance evaluation procedure to improve accountability.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having climbed up more than 8% so far this year as financiers ended up being more optimistic about the bank shedding its .

"The pressure, by the way, for me - it does not disappear, it just changes" from concentrating on historical problems to future development, Scharf stated. "I'm not going to work any less tough, I'm not going to feel any less pressure, I'll most likely have more fun."

Below is a transcript of Reuters' interview with Scharf, which has been modified for length and clarity.

REACTIONS

I feel great. I felt a little psychological the other day. Everyone believes I'm this tough, tough individual, and I'm not in fact. It's been so long in the making, it's affected many people so negatively. And I started getting notes immediately from everyone, however specifically individuals who work here. I would say 80% of them, 75% of them had to do with their experience here over a time period and how happy they are now, and grateful. Twenty percent had to do with the $2,000 (stock award) we were providing.

All of an unexpected, it's like it's all deserved it and everybody's sensation it. It's everybody, and I really do think that everyone who is here has been affected by the work. Some straight, due to the fact that they needed to do it, but even just individuals having to speak to their household and pals on weekends about Wells Fargo news, and why do they still work here? You put individuals through a lot.

GROWTH AREAS

I would expect that across all the remaining companies that we have, with the small exception of our mortgage business, all have opportunities to grow and produce greater returns.

So it holds true of the wealth company through commercial still true of CIB (business and financial investment banking), since although we're seeing results and considerable upside there, it's true in our company, and very significantly, it holds true in our customer and little organization banking service, where they were most impacted by the sales practice scandal. We're just presenting disciplines back to be able to serve clients more broadly and grow in manner ins which we have not been able to.

People always ask me, "What are the leading three concern locations for growth?" And I attempt not to respond to the question, because I actually think every line of work has an opportunity.

ACQUISITIONS

Not on the list today. At some time, capabilities around payments, around benefits, around the motion of securities, would we want to take a look at something like that? Sure. But we have not even begun to think of what that is. And we still have more work to do. We do not wish to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a completely different business. The culture is various here, it's not a "me" culture. People want to be dealt with fairly, they wish to be paid fairly, however they come here since they wish to work together. That is incredibly important.

Carried to an extreme, it harmed us due to the fact that we didn't make hard choices about individuals, we didn't challenge things. But I do believe a culture like that, in a balanced way, is amazing to have. It takes a very long time to build.

We have real responsibility in the company, which's those that's positive, that's negative, but it likewise brings with it a strong desire to assist individuals get better.

It's much more of a meritocracy. Nothing's best. We have actually still got a ways to go, but it drives efficiency. Every senior leader is anticipated to be associated with an in-depth method both the method and the execution of their organization strategy.

HEADCOUNT

We're including lenders, sales people, relationship managers in the industrial bank, innovation resources. We're simply funding it through performances that we're getting elsewhere. There's substantial opportunities to become more effective.

BUYBACKS AND DIVIDENDS

We have actually been buying a great deal of stock back, and I expect that we'll continue to purchase stock back. So on the dividend, what we wish to be able to do is increase the revenues capacity of the business (and) increase the dividend to keep a relatively consistent payment ratio. We wish to have the ability to regularly increase the dividend at an affordable level.

Hopefully we'll have more chances to invest inside the organization so we'll likely buy less stock back than we had.

FUTURE PLANS

(Scharf's hobbies include woodworking, playing guitar and tennis.)

As tough as I've been working, we find time to do the important things that allow us to regrow.

I'm not going to work any less difficult, I'm not going to feel any less pressure. I'll probably have more enjoyable.

INDUSTRY REACTION
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I've spoken with practically all the big banks' CEOs congratulating us. When you're on the inside of these things, you understand how hard they really are and what it takes. Folks have stated it benefits the industry. A strong Wells Fargo, without those constraints, allows Wells to be able to support development. And although we're all very competitive, a strong U.S. is a great thing.

(Reporting by Nupur Anand and Lananh Nguyen in New York; Editing by Matthew Lewis)