Chat of a new Wells Fargo CEO stirs; Be Skeptical By Investing.com

By Charley Blaine

Investing.com – If you want to know who is active or not among the big banks of the country, the day is a little like a catnip.

The New York Post reported today that the directors of Wells Fargo (NYSE 🙂 was talking with Harvey Schwartz, a former senior executive at Goldman Sachs (NYSE :), about replacing current CEO Tim Sloan.

Sloan, CEO since 2016, is under pressure from regulators, who do not think the country's fourth largest bank is making enough progress to overcome the scandals that have rocked the country in recent years. This included the opening of fake accounts and the badessment of fees charged by customers for services they did not know and wanted, as well as higher fees for African-American and Latino borrowers with profiles. credit similar to those of white customers and a computer error that cost their homes in the financial crisis.

Senator Elizabeth Warren, a Mbadachusetts Democrat running for presidential election, said she thought Sloan should resign.

It is true that the fourth quarter, which amounted to $ 1.21 per share, exceeded the estimates of badysts interviewed by Investing.com. But that was after missing estimates for two quarters. Revenues have been stable over the past year. And the forecast of $ 1.11 for first quarter fiscal year profits is $ 1.12 lower than last year.

The title may be up 8.5% this year, but it is stable over the month and is trading at 16% below the 52-week high reached last summer. It fell 24% in 2018. It was slightly down on Thursday because of a different problem: the impact of the Federal Reserve's decision not to raise interest rates on profits of the banks.

This brings us back to Schwartz, former Chief Operating Officer at Goldman, who lost the top position to David Solomon.

He does not talk about discussions with Wells Fargo. It may be that there is another candidate that the Post Office has stated can not appoint. And Wells Fargo denied having any discussions with anyone.

Even though Schwartz talks to Wells Fargo, it's not clear he wants the job. Wells Fargo is based in San Francisco and has a head office in Charlotte, NB, and, according to the Post article, he does not want to live in these places. And he is supposed to think of running a family investment office.

Then there is how much money Wells Fargo should spend so that a stranger can move to a nice place. Sloan paid nearly $ 18 million in salaries and shares in 2018. Presumably, Schwartz would cost more, a lot more. And it would be necessary for the regulators (the controller of the currency and the Federal Reserve) and the critics of Wells Fargo to adhere.

In addition, the situation is risky, given all the problems of Wells Fargo.

"When you replace a CEO in an institution plagued by problems and a crisis, and that it makes the headlines, it's an extremely difficult research," said Jeanne Branthover, managing partner of the executive recruitment company DHR International. Bloomberg last month.