Scharf says he ended up being psychological as $1.95 trillion possession cap raised

Focus shifts to growth in charge card, financial investment banking

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Wells Fargo shares increase almost 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf knows he has a track record for sternness, but he said that when the bank was finally without a $1.95 trillion asset cap by regulators on Tuesday, he became psychological.

"Everyone thinks that I'm this tough, tough person ... but it's been so long in the making, it's affected many individuals so negatively," Scharf said. "All of a sudden, it's like it's all deserved it and everyone's sensation it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to fix its deeply entrenched problems from a fake-accounts scandal that erupted in 2016. The bank dealt with a public outcry, was blasted by legislators and slapped with billions of dollars in fines. The Federal Reserve's decision to lift among Wells Fargo's last significant penalties this week has actually mostly closed that chapter in its history. It likewise seals Scharf's legacy after a difficult turn-around in which he upgraded management, slashed headcount and shed organizations.

"I feel great," Scharf told Reuters in a comprehensive interview on Wednesday after being inundated by congratulatory messages from employees and counterparts at other banks.

He is turning his focus to development after serving nearly 6 years as Wells Fargo's fixer-in-chief. He prepares to broaden even more in charge card and investment banking, while also investing in wealth and business banking.

It will not expand in mortgages, he said. The bank exited much of those operations after they were beset by scandal.

As Wells Fargo intends to increase profits, it prepares to raise its dividend to keep payments constant for investors, Scharf said. Share buybacks will continue, but their rate will most likely slow as the bank purchases growth, he said.

Scharf, who previously ran BNY and Visa, took control of scandal-plagued Wells Fargo after his 2 predecessors were ousted. He installed new management, slashed more than 55,000 tasks, exited unprofitable organizations and revamped the bank's danger management and controls. In an effort to transform its culture, he likewise reworked the company's performance evaluation process to enhance accountability.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having climbed up more than 8% up until now this year as financiers ended up being more optimistic about the bank shedding its regulatory luggage.

"The pressure, by the way, for me - it doesn't go away, it simply changes" from concentrating on historical problems to future development, Scharf said. "I'm not going to work any less hard, I'm not going to feel any less pressure, I'll most likely have more enjoyable."

Below is a records of Reuters' interview with Scharf, which has been edited for length and clearness.

REACTIONS

I feel excellent. I felt a little emotional yesterday. Everyone believes I'm this tough, hard individual, and I'm not in fact. It's been so long in the making, it's affected numerous people so negatively. And I started getting notes right away from everyone, but especially individuals who work here. I would say 80% of them, 75% of them were about their experience here over a time period and how proud they are now, and grateful. Twenty percent had to do with the $2,000 (stock award) we were providing.

All of an unexpected, it's like it's all been worth it and everyone's feeling it. It's everyone, and I truly do think that everyone who is here has actually been affected by the work. Some straight, since they needed to do it, however even just people needing to speak with their household and friends on weekends about Wells Fargo news, and why do they still work here? You put people through a lot.

GROWTH AREAS

I would expect that throughout all the staying companies that we have, with the slight exception of our mortgage service, all have chances to grow and produce greater returns.

So it's real of the wealth service through commercial still true of CIB (business and investment banking), due to the fact that although we're seeing results and significant upside there, it's true in our business, and very notably, it's true in our consumer and small company banking business, where they were most affected by the sales practice scandal. We're just introducing disciplines back to be able to serve clients more broadly and grow in ways that we have not had the ability to.

People constantly ask me, "What are the leading 3 concern locations for growth?" And I attempt not to respond to the question, due to the fact that I really believe every industry has a chance.

ACQUISITIONS

Not on the list right now. At some time, capabilities around payments, around rewards, around the movement of securities, would we be willing to take a look at something like that? Sure. But we have not even started to consider what that is. And we still have more work to do. We do not wish to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some methods, it's a totally different company. The culture is different here, it's not a "me" culture. People wish to be treated relatively, they want to be paid fairly, but they come here since they desire to collaborate. That is incredibly crucial.

Carried to a severe, it harmed us due to the fact that we didn't make tough choices about individuals, we didn't challenge things. But I do think a culture like that, in a well balanced method, is incredible to have. It takes a long period of time to construct.

We have real accountability in the company, which's those that's positive, that's negative, however it likewise brings with it a strong desire to assist individuals improve.

It's far more of a meritocracy. Nothing's perfect. We have actually still got a ways to go, but it drives performance. Every senior leader is anticipated to be involved in a comprehensive method in both the strategy and the execution of their service plan.

HEADCOUNT

We're adding lenders, sales individuals, relationship managers in the industrial bank, innovation resources. We're simply funding it through efficiencies that we're getting somewhere else. There's substantial opportunities to become more effective.

BUYBACKS AND DIVIDENDS

We've been purchasing a lot of stock back, and I expect that we'll continue to purchase stock back. So on the dividend, what we wish to be able to do is increase the earnings capability of the company (and) increase the dividend to keep a reasonably consistent payout ratio. We want to be able to consistently increase the dividend at an affordable level.

Hopefully we'll have more opportunities to invest inside business so we'll likely buy less stock back than we had.

FUTURE PLANS

(Scharf's pastimes consist of woodworking, playing guitar and tennis.)

As difficult as I've been working, we find time to do the things that enable us to restore.

I'm not going to work any less tough, I'm not going to feel any less pressure. I'll probably have more fun.

INDUSTRY REACTION

I've spoken with almost all the huge banks' CEOs congratulating us. When you're on the within these things, you understand how hard they truly are and what it takes. Folks have said it's great for the industry. A strong Wells Fargo, without those restrictions, permits Wells to be able to support growth. And although we're all extremely competitive, a strong U.S. is a great thing.

(Reporting by Nupur Anand and Lananh Nguyen in New York; Editing by Matthew Lewis)