Wells Fargo & Co. Chief Executive Officer Tim Sloan has stepped down effective immediately amid mounting pressure over the lender's scandals, and will be replaced on an interim basis by the bank's general counsel, C. Allen Parker.
The bank is launching an external search for its next CEO and president, the company said in a statement Thursday.
Mr. Sloan, 58, spent more than 31 years at the San Francisco-based lender, rising to CEO after scandals began erupting in 2016. He now plans to retire at the end of June. The stock climbed in after-hours trading.
Mr. Sloan has long faced calls for his ouster from critics, including Sen. Elizabeth Warren, a Democratic candidate for president. They've said a longtime insider couldn't be counted on to clean up scandals across its branch network and other divisions. The board had reiterated its support for Mr. Sloan as recently as last week.
"Tim Sloan has served this company with pride and dedication for more than 31 years," the board's chair, Betsy Duke, said in the statement. "He has worked tirelessly over this period for all of our stakeholders in the best long-term interest of Wells Fargo. His decision, and today's announcement, reflect that commitment and his belief that a new CEO at this time will best position the company for success."
Mr. Parker, 64, will be an unusual bank boss. He was a longtime lawyer for Cravath Swaine & Moore, one of Wall Street's preeminent law firms, where he started in 1984 and was presiding partner before joining Wells Fargo in 2017. He was among more than 10 senior hires from outside the company as it sought to clean up its image with regulators, investors and the public.
Mr. Sloan was promoted to the top job in October 2016 when John Stumpf stepped down amid intense blowback over the revelation that employees had opened millions of fake accounts to meet sales goals.
Last year, Wells Fargo was dealt an unprecedented blow from the Federal Reserve as then-Chair Janet Yellen's final act: The bank can't grow assets beyond their level at the end of 2017 until it addresses missteps to the regulator's satisfaction. That's in addition to billions in fines and settlement costs.
Throughout his tenure and during grueling hearings on Capitol Hill, Mr. Sloan faced questions about how a three-decade veteran could possibly turn the bank around.
At one point, Ms. Warren said that "his hands are too dirty from overseeing years of scams and scandals." Such attacks, compounded by criticism from regulators, landed him back in front of the House Financial Services Committee earlier this month.
'About damn time'
Critics rejoiced Thursday.
"About damn time," Ms. Warren wrote on Twitter. "He enabled Wells Fargo's massive fake accounts scam, got rich off it, & then helped cover it up. Now -- let's make sure all the people hurt by Wells Fargo's scams get the relief they're owed."
Analysts and investors will have to get to know Mr. Parker, who's maintained a relatively low public profile while at the bank. He's married with four children, likes golf, and wrote a master's thesis on religious minorities in Pakistan, according to an interview posted on the bank's website in 2017.
"The idea of taking on a new challenge in my career fascinated me," he said then. "I knew I'd have the opportunity to help the company become a better organization and navigate the legal and regulatory issues surrounding the sales practices issues."
In contrast, Mr. Sloan was well known when he took the helm. He rose rapidly through the executive ranks after Mr. Stumpf became CEO in 2007, becoming chief administrative officer in 2010 and chief financial officer just five months later. By 2015, he was president and chief operating officer.
"Tim Sloan may be a fall guy here, but they're doing the right thing," said Tony Scherrer, director of research at Smead Capital Management, which owns 1.26 million Wells Fargo shares. "Maybe it's just a gesture" to assuage criticism, he said. But "it resets the bar. It shows that they're not going to let it just fester."