New Wells Fargo & Co. CEO Charlie Scharf’s first overhaul included bringing in yet another former JPMorgan Chase & Co. executive and breaking the firm’s main businesses into smaller fiefdoms.
The reorganization divides the bank’s business lines into five units from three previously, Wells Fargo said in a statement Tuesday. Scharf split the investment bank into its own unit and separated consumer lending under a new leader.
The bank, a major auto lender, has acknowledged employees opened millions of fake bank and credit card accounts to meet wildly unrealistic sales goals. Wells Fargo admitted that it forced borrowers to pay for auto insurance they didn’t need. Some of those auto borrowers ultimately had their vehicles repossessed. Wells Fargo has admitted to illegally repossessing the vehicles of hundreds of service members.
Scharf’s biggest moves after almost four months atop the bank come as Wells Fargo works to regain customer trust and mend ties with regulators and elected officials following years of scandals that claimed the last two CEOs.
“These organizational changes enable us to more effectively pursue our goals and take advantage of the opportunities in front of us,” Scharf said in the statement. “I am confident that this organizational model and our strengthened risk and control foundation will bring greater focus and accountability to the company.”
The changes mean smaller universes for some of Wells Fargo’s long-standing business leaders. Mike Weinbach is joining from JPMorgan to run the new consumer-lending division, the fifth man with experience at the nation’s biggest bank hired by Scharf. Weinbach will take on some of the responsibilities of Mary Mack, who previously led all of consumer banking and lending. She will now oversee the massive branch network, small-business banking and deposits.
Perry Pelos, who most recently ran wholesale banking, will lead the commercial side of the business, while Jon Weiss, most recently head of wealth and investment management, becomes CEO of corporate and investment banking. The bank will search for a new wealth head.
Since joining in October, Scharf has been conducting a wide-ranging review, including a marathon of meetings with executives in which he grilled them on the ways they do business. He is working to overhaul operations while trying to push the San Francisco-based firm clear of the scandals, which kicked off in 2016 with allegations that employees opened fake customer accounts to meet sales goals.
Scharf struck a cautious tone during his first earnings call last month, emphasizing that the work of reinvigorating the firm after years of problems is far from over. He said that he’s been spending the majority of his time on regulatory issues, and that it will take much of this year to complete his reviews.