The embattled CEO of Wells Fargo is stepping down.
Tim Sloan, who took over as chief executive of the bank in October 2016, will retire, the bank said in a press release Thursday. The bank’s general counsel, Allen Parker, will take over as Interim CEO and president.
The news that Wells Fargo’s numerous issues claimed its second CEO — Sloan, after all, was assigned to clean up the mess that had claimed his predecessor — came suddenly. Earlier this month, the bank had disclosed that its board gave Sloan a 5 percent raise to $18.4 million for his work in 2018. And when there were news reports that the bank was considering a former Goldman Sachs executive as a potential CEO, the bank issued strong statements that Sloan had the full confidence of its board.
Just two weeks ago, Sloan testified before Congress about his efforts to clean up the various messes he had inherited. Before the four-hour hearings began, CNBC’s Ylan Mui asked Sloan how long he expected to remain CEO, and he replied that he, his board and all of his 260,000 employees thought he was doing a great job.
But in the end, the pressure was just too great.
During his tenure, Sloan has struggled to satisfy regulators’ demands to overhaul the sprawling institution. Last year, thanks to “widespread consumer abuses,” the Federal Reserve capped the bank’s asset growth after the bank found more problems with customer dealings.
Wells Fargo shares jumped 2.6 percent in extended trading Thursday following the announcement
Shares of the bank have struggled amid the fallout from the sales practices scandal and scrutiny from political leaders. Over the last five years, the stock is flat, compared to a near 70 percent jump in J.P. Morgan Chase shares and a 40 percent move higher for the whole S&P financial sector.
Sloan’s departure follows repeated calls from lawmakers for the CEO to step down. In October, Sen. Elizabeth Warren sent a letter to Federal Reserve Chairman Jerome Powell calling on the Fed to maintain its growth cap on Wells Fargo until the bank replaces Sloan.
In an interview with CNBC earlier this year, he argued that he was the best man for the CEO job. He also confirmed that the Fed’s growth cap will remain in place until the end of 2019 in Wells Fargo’s most recent earnings report.
Sloan guided the bank through the aftermath of sales scandals that have resulted in more than $2 billion in fines, and growth restrictions imposed by the Federal Reserve.
When asked Thursday whether he supported Sloan, Berkshire Hathaway CEO Warren Buffett told CNBC’s Becky Quick “yes, 100 percent.” Buffett says that’s because he doesn’t want the job. Berkshire Hathaway is Wells Fargo’s biggest shareholder, with more than 9 percent of shares according to FactSet.
More than two decades ago, Buffett stepped in to help temporarily lead a beleaguered Salomon Brothers after a scandal. Sloan was named CEO shortly after Wells Fargo’s sales practices scandal came to light in 2016. “I’m very empathetic when he walks into a big problem at a very very large and politically sensitive institution,” Buffett said.