In a conference call this morning for investors in Wells Fargo, the scandal-plagued bank, there was a question on the line for Allen Parker, the bank’s temporary CEO: “What type of person,” an analyst asked, “is Wells Fargo looking for as a permanent CEO?”
More specifically, she wondered, is the board looking for a woman, a person of color, or someone bringing some other form of diversity to the table? Is it mainly looking for someone with a track record of balancing the books? There are other pertinent questions she might well have asked: Is the company looking for a troubleshooter, some smooth political operator able to scrub the flecks of scandal from Wells Fargo’s tarnished image? What type of leader should we expect? Top-down, bottom-up, or something else entirely?
Parker, the bank’s former general counsel hauled in after his predecessor Tim Sloan’s sudden resignation, couldn’t give much of an answer. “Choosing a company’s leader is the most important thing a board of directors does,” he said. “I’m not involved in the search process.” The board was working with an outside search firm, he said, but the search was still in the “relatively early stages.”
From scandal to scandal
For the past three years, Wells Fargo has hurtled from disaster to disaster, largely pertaining to its account fraud scandal. Last year, the Federal Reserve barred it from growing its already sizable asset base any further, until the central bank was convinced that the company’s internal problems had been laid to rest.
The next person in the driver’s seat of Wells’ stagecoach has a potentially treacherous journey ahead of them: He or she must clean up the lingering mess, set the bank back on track, and manage the sometimes contradictory demands of regulators, customers, and shareholders alike. Directors will be looking for someone with sticking power and the ability to lead a big ship through choppy waters, particularly with the lingering question mark of a recession on the horizon. They may also be hoping to find a candidate who adds critical diversity at the top, and who can give the impression of sanguine, approachable leadership, backed by a solid set of ethics.
Warren Buffett, the bank’s largest shareholder, had some views of his own: “They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street,” he told the Financial Times (paywall). “They probably shouldn’t come from JPMorgan or Goldman Sachs.” This isn’t because Wall Street alumni wouldn’t be qualified, he clarified, but because they are “automatically going to draw the ire of a significant percentage of the Senate and the US House of Representatives, and that’s just not smart.”
From a public relations perspective, then, there might be benefits in looking to heads of smaller banks, particularly those who have proven themselves able to take the horse by the reins. Bill Demchak, of PNC Financial, is one frequently suggested name. A former JPMorgan executive, he joined PNC in 2002 as CFO and has been CEO since 2013.
The value of adding diversity
Banks are increasingly under pressure to improve diversity at the top: all-male, all-white shortlists strike consumers and shareholders alike not only as stuffy and unimaginative, but as betraying a reluctance to embrace change. In a House committee meeting this week, the CEOs of seven giant American banks were asked to raise their hands if they believed their “likely successor will be a woman or a person of color.” Their failure to do so was met with swift criticism—leading JP Morgan CEO Jamie Dimon to comment in the bank’s subsequent earnings call that the bank had “exceptional women” with the potential to take on the role after him. “My successor may very well be a woman but it may not, and it really depends on the circumstance at the time,” he said.
If Wells Fargo’s directors are hoping to find a female lead, there are a few candidates that immediately suggest themselves. Beth Mooney, KeyBank’s CEO for the past eight years, made a name for herself after the bank’s successful acquisition of First Niagara, which many investors saw as a questionable, even risky, decision. She’s proven herself to be skilled at managing the nerves of ruffled investors, soothing underserved consumers, and managing corporate responsibility—all certain to be tasks for the incoming Wells Fargo head.
Nandita Bakhshi, CEO of Bank of the West, is likely to be another name on directors’ lists. Though relatively new to her role at the San Francisco-based bank, she’s earned plaudits for her consumer-focused approach, as well as her efforts to revitalize the company’s internal culture.
There’s a bracing list of tasks to be accomplished. Wells Fargo’s board of directors and its search firm have an unenviable job. The new appointment will have their work cut out for them—but deciding which person is up to the task, while communicating the right message about the bank’s vision, ethos, and future, is almost as challenging.