Scharf states he ended up being emotional as $1.95 trillion possession cap lifted

Focus shifts to growth in credit cards, investment banking

*

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 credibility for sternness, but he said that when the bank was lastly without a $1.95 trillion possession cap by regulators on Tuesday, he became psychological.

"Everyone thinks that I'm this hard, hard individual ... but it's been so long in the making, it's affected many people so negatively," Scharf stated. "All of a sudden, it's like it's all been worth it and everybody's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to repair its deeply established problems from a fake-accounts scandal that appeared in 2016. The bank dealt with a public outcry, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's choice to lift one of Wells Fargo's last significant penalties today has largely closed that chapter in its history. It also seals Scharf's legacy after a grueling turnaround in which he overhauled management, slashed headcount and shed services.

"I feel great," Scharf told Reuters in a wide-ranging interview on Wednesday after being inundated by congratulatory messages from employees and equivalents at other banks.

He is turning his focus to growth after serving nearly 6 years as Wells Fargo's fixer-in-chief. He prepares to broaden even more in charge card and financial investment banking, while also investing in wealth and industrial banking.

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

As Wells Fargo intends to increase revenues, it prepares to raise its dividend to keep payments constant for financiers, Scharf stated. Share buybacks will continue, however their speed will probably slow as the bank buys development, he said.

Scharf, who formerly ran BNY and Visa, took of scandal-plagued Wells Fargo after his 2 predecessors were ousted. He set up new leadership, slashed more than 55,000 tasks, left unprofitable companies and revamped the bank's threat management and controls. In an effort to transform its culture, he likewise remodelled the business's efficiency review process to enhance responsibility.

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

"The pressure, by the way, for me - it does not go away, it simply alters" from focusing on historical problems to future development, Scharf stated. "I'm not going to work any less hard, 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 been modified for length and clarity.

REACTIONS

I feel terrific. I felt a little psychological the other day. Everyone thinks I'm this tough, difficult individual, and I'm not really. It's been so long in the making, it's affected a lot of individuals so negatively. And I began getting notes right away from everybody, but particularly 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 appreciative. Twenty percent had to do with the $2,000 (stock award) we were giving them.

All of a sudden, it resembles it's all been worth it and everyone's feeling it. It's everybody, and I truly do think that everybody who is here has actually been affected by the work. Some directly, because they had to do it, however even just people having to talk to their household and pals on weekends about Wells Fargo news, and why do they still work here? You put people through a lot.

GROWTH AREAS

I would anticipate that throughout all the remaining businesses that we have, with the slight exception of our mortgage business, all have opportunities to grow and produce greater returns.

So it holds true of the wealth business through commercial still true of CIB (corporate and investment banking), due to the fact that although we're seeing results and significant upside there, it's true in our organization, and super importantly, it's real in our customer and small company banking company, where they were most affected by the sales practice scandal. We're simply presenting disciplines back to be able to serve clients more broadly and grow in manner ins which we have not been able to.

People constantly ask me, "What are the leading 3 priority areas for growth?" And I try not to address the concern, because I really think every industry has a chance.

ACQUISITIONS

Not on the list today. At a long time, capabilities around payments, around rewards, around the movement of securities, would we be prepared to take a look at something like that? Sure. But we haven't even begun to consider what that is. And we still have more work to do. We don't want to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a completely different company. The culture is different here, it's not a "me" culture. People wish to be dealt with fairly, they wish to be paid fairly, but they come here since they wish to interact. That is exceptionally important.

Carried to a severe, it harmed us because we didn't make tough choices about people, we didn't face things. But I do think a culture like that, in a well balanced way, is unbelievable to have. It takes a long period of time to build.

We have real responsibility in the company, and that's those that's favorable, that's unfavorable, however it also brings with it a strong desire to help people get better.

It's much more of a meritocracy. Nothing's perfect. We've still got a ways to go, but it drives performance. Every senior leader is expected to be associated with a comprehensive method both the strategy and the execution of their business strategy.

HEADCOUNT

We're including lenders, sales people, relationship supervisors in the industrial bank, innovation resources. We're just funding it through effectiveness that we're getting in other places. There's considerable opportunities to end up being more effective.

BUYBACKS AND DIVIDENDS

We've been purchasing a great deal of stock back, and I expect that we'll continue to buy stock back. So on the dividend, what we wish to have the ability to do is increase the revenues capability of the company (and) increase the dividend to keep a relatively constant payment ratio. We wish to have the ability to regularly increase the dividend at a reasonable level.

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

FUTURE PLANS

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

As tough as I've been working, we find time to do the things that permit us to restore.

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

INDUSTRY REACTION

I have actually heard from practically all the huge banks' CEOs congratulating us. When you're on the within these things, you know how hard they really are and what it takes. Folks have said it benefits the market. A strong Wells Fargo, without those constraints, allows Wells to be able to support growth. And although we're all extremely competitive, a strong U.S. is a good thing.

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