Wells Fargo Mulling to Hire Ex-Goldman Executive as New CEO

Per a report from The New York Post, Wells Fargo & Company WFC is mulling to replace its current CEO Timothy Sloan with Harvey Schwartz, former president and co-chief operating officer of Goldman Sachs GS.

Sloan took reins in October 2016 when the Wall Street biggie was facing public and political outrage, following breakout of the fake accounts scandal. Wells Fargo seems to have made modest progress under his leadership so far. However, the bank still lacks regulators’ confidence, due to which restriction on asset growth is yet to be lifted.

Last week, Sloan was questioned by the Office of the Comptroller of the Currency, post which the regulator commented to be disappointed with the bank and said that it has “inability to execute effective corporate governance and a successful risk management program.”

Per the article, talks with Schwartz are being held up, with the consideration being that he does not want to relocate to Charlotte or San Francisco. Notably, Wells Fargo’s East Coast headquarters are located in the Charlotte area.

Following the lapse of non-compete agreement with Goldman, Schwartz has been looking for other opportunities such as starting a family investment office with Pablo Salame, ex co-head of Goldman Sachs’ securities unit.

However, a Wells Fargo spokesperson informed Reuters that there was “no validity” to the rumors that the bank was in talks with potential candidates for the CEO position.

OurTake

Wells Fargo’s move to hire its leader from outside might help it gain public and regulators’ confidence. Also, it would provide a fresh approach to managing the problems that are currently being faced by the bank.

The bank’s focus on achieving previously laid down financial targets, with support from improving economic backdrop, might help it overcome the negatives.

Shares of Wells Fargo have lost 4.9% over the past 12 months compared with 5.5% decline recorded by the industry.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few stocks from the finance space worth a look are Fifth Third Bancorp FITB and M&T Bank Corporation MTB. Both these stocks are currently carrying a Zacks Rank #2 (Buy).

Over the past 60 days, Fifth Third Bancorp has been witnessing upward earnings estimate revision for the current year. Its shares have gained more than 10% in the past three months.

M&T Bank’s earnings estimates for 2019 have been revised upward over the past 60 days. Shares of the company have gained more than 15% in the past three months.

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