Scharf states he became emotional as $1.95 trillion asset cap raised

Focus shifts to growth in credit cards, investment banking

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Wells Fargo shares rise almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a reputation for sternness, but he said that when the bank was finally devoid of a $1.95 trillion property cap by regulators on Tuesday, he became psychological.

"Everyone believes that I'm this difficult, tough individual ... but it's been so long in the making, it's impacted so numerous people so adversely," Scharf said. "All of an abrupt, it resembles it's all deserved it and everybody's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, swearing to fix its deeply established issues from a fake-accounts scandal that appeared in 2016. The bank faced a public outcry, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's choice to raise one of Wells Fargo's last major punishments this week has actually mostly closed that chapter in its history. It also cements Scharf's tradition after an intense turn-around in which he overhauled management, slashed headcount and shed services.

"I feel terrific," Scharf informed Reuters in a comprehensive interview on Wednesday after being inundated by congratulatory messages from staff members and equivalents at other banks.

He is turning his focus to growth after serving practically 6 years as Wells Fargo's fixer-in-chief. He prepares to broaden further in credit cards and financial investment banking, while also investing in wealth and industrial banking.

It will not broaden in mortgages, he stated. The bank exited a number of those operations after they were beleaguered by scandal.

As Wells Fargo aims to increase profits, it plans to raise its dividend to keep payouts constant for investors, Scharf said. Share buybacks will continue, but their pace will probably slow as the bank invests in growth, he said.

Scharf, who formerly ran BNY and Visa, took control of scandal-plagued Wells Fargo after his two predecessors were ousted. He installed brand-new leadership, slashed more than 55,000 jobs, left unprofitable organizations and reworked the bank's danger management and controls. In an effort to transform its culture, he also revamped the business's performance review procedure to improve responsibility.

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

"The pressure, by the way, for me - it doesn't disappear, it just changes" from focusing on historic issues to future development, Scharf said. "I'm not going to work any less difficult, I'm not going to feel any less pressure, I'll most likely have more enjoyable."

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

REACTIONS

I feel fantastic. I felt a little emotional yesterday. Everyone thinks I'm this difficult, tough individual, and I'm not really. It's been so long in the making, it's impacted a lot of individuals so adversely. And I started getting notes instantly from everybody, but specifically people who work here. I would state 80% of them, 75% of them had to do with their experience here over an amount of time and how happy they are now, and thankful. Twenty percent had to do with the $2,000 (stock award) we were offering them.

Suddenly, it's like it's all been worth it and everybody's feeling it. It's everybody, and I really do think that everyone who is here has actually been impacted by the work. Some straight, due to the fact that they had to do it, but even just people having to speak to their friends and family on weekends about Wells Fargo news, and why do they still work here? You put people through a lot.

GROWTH AREAS

I would expect that throughout all the staying companies that we have, with the slight exception of our mortgage organization, all have opportunities to grow and produce higher returns.

So it's true of the wealth service through commercial still true of CIB (business and financial investment banking), since despite the fact that we're seeing outcomes and substantial upside there, it's true in our service, and extremely significantly, it holds true in our consumer and small service banking business, where they were most affected by the sales practice scandal. We're simply introducing disciplines back to be able to serve customers more broadly and grow in manner ins which we have not had the ability to.

People always ask me, "What are the top 3 priority areas for development?" And I try not to respond to the concern, since I actually think every line of organization has an opportunity.

ACQUISITIONS

Not on the list right now. At some time, capabilities around payments, around benefits, around the motion of securities, would we be ready to look at something like that? Sure. But we haven't even begun to think about 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 an absolutely various business. The culture is various here, it's not a "me" culture. People wish to be dealt with fairly, they desire to be paid relatively, but they come here since they want to interact. That is extremely essential.

Carried to an extreme, it hurt us since we didn't make hard decisions about individuals, we didn't confront things. But I do think a culture like that, in a balanced way, is incredible to have. It takes a long period of time to construct.

We have real responsibility in the organization, which's those that's favorable, that's negative, however it likewise brings with it a strong desire to assist individuals improve.

It's much more of a meritocracy. Nothing's ideal. We've still got a methods to go, however it drives efficiency. Every senior leader is anticipated to be associated with a detailed method in both the method and the execution of their organization strategy.

HEADCOUNT

We're adding bankers, sales people, relationship managers in the industrial bank, technology resources. We're simply moneying it through efficiencies that we're getting somewhere else. There's substantial opportunities to become more effective.

BUYBACKS AND DIVIDENDS

We have actually been purchasing a lot of stock back, and I expect that we'll continue to buy stock back. So on the dividend, what we want to have the ability to do is increase the earnings capacity of the business (and) increase the dividend to keep a relatively constant payout ratio. We want to have the ability to consistently increase the dividend at a reasonable level.

Hopefully we'll have more chances to invest inside business so we'll likely purchase less stock back than we had.

FUTURE PLANS

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

As tough as I have actually been working, we discover time to do the important things that allow us to restore.

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

INDUSTRY REACTION

I've heard from almost all the big banks' CEOs congratulating us. When you're on the within these things, you know how difficult they actually are and what it takes. Folks have stated it's good for the industry. A strong Wells Fargo, without those restrictions, enables Wells to be able to support growth. And even though we're all extremely competitive, a strong U.S. is a good idea.

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