More top executives at Wells Fargo will report to President and Chief Operating Officer Tim Sloan, the company announced Monday, a move that comes amid the ongoing fake accounts scandal that has led to calls for the resignation of Chief Executive Officer John Stumpf.
The company named three new or expanded roles, all of which were added to the bank’s operating committee, and the creation of a new business group focused on payments, virtual solutions and innovation. Five members of the bank’s operating committee now will report to Sloan, while six members, including Sloan, will report to Stumpf, who leads the committee. The new roles are effective Nov. 1.
Arguably the biggest shift was that of Avid Modjtabai, the head of consumer lending, who has been named chief of the new payments group focused on digital and online offerings, investments in research and development and strategic partnerships. Wells said the group will bring together teams across the company in order to “accelerate the company’s focus on delivering the next generation of payments capabilities.”
“We’re not aware of any of our competitors that have anything like this,” Sloan said in an interview of the new business group. “Every bank is organized differently. I wouldn’t say we’ve discovered alchemy here and we’re going to turn this into gold. We’re all competing for the same consumer and commercial customers, and by bringing these together we can be faster and integrate all the payment products.”
Modjtabai is a 23-year veteran of Wells and already serves on the bank’s operating committee reporting to Sloan. Seven business lines will report to Modjtabai, including consumer credit cards and retail services, deposit products and treasury management and merchant services.
The shift comes amid the ongoing scandal after the bank agreed to pay $190 million in fines and restitution after regulators accused it of opening roughly 2 million phony accounts. The enforcement action has drawn heavy criticism against Wells, including calls from lawmakers for Stumpf’s ouster.
Wells' board has launched a separate investigation into the bank's illegal sales practices. Last month, the bank announced that it would extend the remediation to consumers harmed by the creation of phony accounts to seven years, from 2009 through 2015. Sloan said those dates were extended "just to make sure we didn't miss anyone."
When asked if the management changes were related to the phony accounts scandal, Sloan said, “No.”
Yet the shakeup would effectively concentrate more authority in Sloan, as the new roles will report directly to him.
Consumer lending will be taken over by Franklin Codel, who will also continue in his role as head of home lending. Additionally, Codel will join Wells’ operating committee reporting to Sloan, and will assume the expanded role of consumer lending overseeing dealer services, which includes indirect auto lending and commercial services, and personal lending, which oversees direct auto, personal loans and student lending.
Eight business lines now will report to Codel, including capital markets, business capability development and home lending production and servicing. Codel was named head of Wells’ home lending business last year after leading mortgage production since 2011.
Perry Pelos, a 29-year Wells veteran who most recently served as head of commercial banking services, was named head of wholesale banking, a unit that Sloan had previously headed. Pelos will also join Wells’ operating committee reporting to Sloan.
Thirteen business lines will report to Pelos, including middle market banking, specialized lending, commercial banking, Wells Fargo Insurance and Wells Fargo Securities.
Separately, Mary Mack, who was named head of community banking in July, also was named to the operating committee reporting to Sloan.
Mack had succeeded Carrie Tolstedt, the former head of community banking who left the company last month at the direction of the board of directors, which has clawed back $19 million for Tolstedt’s role in the bank’s phony accounts scandal.
The five executives currently on the operating committee who report to Stumpf are: Hope Hardison, Wells’ chief administrative officer; David Julian, chief auditor; Michael Loughlin, chief risk officer; John Shrewsberry, chief financial officer; James Strother, general counsel, and Sloan.