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Warren Buffett, the main shareholder of Wells Fargo, has asked the US bank to seek a new general manager outside Wall Street, able to restore his battered reputation.
"They just have to come from somewhere [outside Wells] and they should not be coming from Wall Street, "Buffett said of the bank's next leader in an interview with the Financial Times. "They probably should not come from JPMorgan or Goldman Sachs."
Former Wells Fargo CEO Tim Sloan resigned last month after being pressured by Congress and regulators. Allen Parker, Wells' general counsel, replaced him on an acting basis.
The bank is struggling to recover from a false accounts scandal in which branch employees, in the hope of achieving their goals, have unlawfully opened millions of accounts for customers without their consent.
The wrongdoing has for the first time emerged in 2016 under the orders of former CEO John Stumpf. But the decision to replace Stumpf that year by Sloan, a veteran of the 25-year-old bank, has upset some politicians.
Mr. Buffett, who owns shares in Wells since 1989, now prefers the new leader to be an outsider and has not worked in the investment bank, saying it would be a red cloth in Washington.
"There are many good people to lead him [from the Wall Street banks]but they will automatically anger a large percentage of the US Senate and House of Representatives, which is simply not smart, "Buffett said.
Excluding Wall Street bankers would eliminate many of the potential candidates proposed by badysts and investors to run the fourth largest bank in the United States. On this list are Gary Cohn and Harvey Schwartz, former executives of Goldman Sachs, Matt Zames, former banker of JPMorgan Chase, and Marianne Lake, current chief financial officer of JPMorgan.
Analysts also cited the name of Bill Demchak, former executive of JPMorgan, currently managing director of PNC Financial, a Pittsburgh-based bank.
Buffett owns close to 10% of Wells shares, valued at approximately $ 22 billion. He believes that the bank's competitive position remains strong, despite the damage caused by the false accounts scandal that erupted more than two years ago.
"If you look at Wells, they discover a lot of problems, but they do not lose any customers to talk to," he said. "They are losing those in the public sector. . . but one in three households do business with Wells in one way or another. The bank still holds more than $ 900 billion in customer deposits.
Just hours before Mr. Sloan announced his intention to leave, Mr. Buffett had lent his support to the former CEO during an interview with CNBC television. Betsy Duke, the bank's president, said the board only considered outside candidates.
On the same day, last month, when Sloan was summoned before the House Financial Services Committee, the regulators of the Office of the Comptroller of the Currency issued a very unusual statement in which they said they were "disappointed" by efforts to reform its governance. Two high-ranking Democrats – Maxine Waters, chair of the House's Financial Services Committee, and presidential candidate Elizabeth Warren – had both called from Mr. Sloan.
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While deposits and badets in Wells have been relatively stable since the scandal, the growth of the bank, which was both the industry leader, has slowed. Still, Mr. Buffett said, "I do not care about knowing they're growing up [revenues] or not, I care if they earn earnings per share over time. "
Berkshire Hathaway, the investment vehicle chaired by Buffett, is also the largest shareholder in US Bancorp, the largest "regional" bank in the US, with a market capitalization of $ 80 billion. Since two other large regional lenders have announced a merger earlier this year, Bancorp has been the subject of speculation that it could embark on, possibly as a buyer of PNC Financial, whose capitalization stock market is 58 billion dollars.
However, Buffett said, "I do not like having a bank that we own but buy another one," saying the key to banking is to avoid stupid mistakes and that in mergers, "the acquirer usually has overpaid".
Mr. Buffett's full interview will be published later this month.
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