Shake-up continues at Wells Fargo with poaching of Santander's CEO
In the latest shake-up of Wells Fargo’s leadership team, the scandal-plagued bank has lured the CEO of Santander Holdings USA to become its new chief operating officer.
The hiring of Scott Powell shows that CEO Charlie Scharf is turning to outsiders with whom he has previously worked as he seeks to resolve the San Francisco bank’s sprawling regulatory problems.
Powell, 57, will join Wells Fargo on Dec. 9 and report to Scharf, the $1.9 trillion-asset bank said in a press release Monday. Earlier in their careers, the two executives worked together in the consumer unit at JPMorgan Chase.
The poaching of Santander’s CEO led additional dominoes to fall at the Boston company, which announced Monday that it is promoting two executives to fill Powell’s roles.
At Wells Fargo, Powell will oversee regulatory relations and regulatory execution, as well as a range of operational functions across the company. He said in an interview Monday that he sees parallels between the regulatory challenges facing Wells Fargo and those that he encountered when he became CEO of Santander’s U.S. operations four years ago.
“Based on my experience at Santander, It’s a lot of hard work. There’s no magic to it,” Powell said. “All I can say is it’s probably a multiyear journey to do that effectively.”
Scharf pointed to Powell’s “tremendous experience, proven track record and unquestioned integrity” in explaining the hire.
“He’s the ideal person to take on this new position as we seek to transform Wells Fargo so that high-quality execution, clear accountability and operational excellence become unquestioned components of our culture,” Scharf said in the release.
Santander said Monday that Timothy Wennes will become the new CEO of its U.S. operations. A former executive at MUFG Union Bank, Wennes joined the Boston company in September as chief executive of Santander Bank.
Meanwhile, Santander Consumer USA, which specializes in subprime auto lending, will be headed by Mahesh Aditya, the former chief risk officer at Santander US.
Powell was named CEO of Santander Holdings USA in March 2015 and became CEO of Santander Consumer in August 2017.
One of his major priorities was resolving the company’s many regulatory matters. Santander Bank, for example, raised its Community Reinvestment Act rating to “satisfactory” in 2018 from a “needs to improve” the prior year.
Last year, Santander was also released from a 2015 order by the Office of the Comptroller of the Currency concerning issues with how it billed for a legacy identity protection product.
Santander Consumer paid nearly $26 million in 2017 to resolve probes by attorneys general in Delaware and Massachusetts over its securitization of subprime auto loans. And Santander Bank paid $10 million to the Consumer Financial Protection Bureau in 2016 for charging inappropriate overdraft fees.
Earlier this year, Santander Bank voluntarily suspended new credit card issuance after discovering problems with the way it was calculating interest on some of those cards.
Powell also helped to preserve Santander Consumer’s relationship with Fiat Chrysler. The company had been a preferred lender for Fiat Chrysler since 2013, but that relationship was jeopardized when Fiat began talking about forming its own captive finance unit.
The company still has one last enforcement action to resolve, a 2017 Federal Reserve order requiring stricter oversight of Dallas-based Santander Consumer.
At Wells Fargo, Powell’s responsibilities will overlap with those of Derek Flowers, a senior vice president who is the head of strategic execution and operations. Flowers was elevated to that role earlier this year by interim CEO Allen Parker.
A spokesman for Wells Fargo said Monday that Flowers’ responsibilities will not change, but that he will start reporting to Powell.
Wells Fargo has not had a chief operating officer since Tim Sloan vacated the position in 2016. Sloan was president and COO before serving as CEO of Wells from 2016 to 2019.
Scharf, a former chief executive at Visa and Bank of New York Mellon, was named to the top job at Wells in September.
Last month, the bank announced the hiring of William Daley, a former White House chief of staff and onetime Scharf deputy at BNY Mellon, as vice chairman of public affairs.
Wells Fargo also announced in November that Parker, the general counsel who became interim CEO, and Avid Modjtabai, a senior executive vice president who oversees payments and innovation, both plan to leave the company early next year.