Wells Fargo CEO Tim Sloan offered new details Thursday about what happened when commercial banking employees falsified customer data on an important regulatory form.
But big questions remain. Among them: Why did Wells employees alter customer data in the first place?
Speaking at an industry conference in New York, Sloan was asked about the company’s latest snafu, in which employees in the wholesale division inappropriately altered client data ahead of a regulatory deadline. The altered data was part of an anti-money-laundering disclosure form that shows the beneficial ownership of a business.
Wells executives learned about the problem — which was reported May 17 in The Wall Street Journal — when employees “raised their hand” about inappropriate behavior they had observed, leading to a swift internal investigation, according to Sloan. The San Francisco company in the process came to the conclusion that the training provided to employees was inadequate.
“The issue, candidly, was the quality of training that we were providing to our team members,” Sloan said.
But when an analyst pressed Sloan further on the matter, asking whether any employees intentionally falsified data, Sloan left open the possibility that misbehavior was at play. The problems occurred in a unit of Wells Fargo’s commercial bank that serves businesses with between $5 million and $20 million in annual revenue.
“We still have a review that’s going on in place, but it wouldn’t surprise me if we found some activity, again, that was beyond just a lack of training,” Sloan said.
Wells is in the midst of a nearly two-year battle to salvage its reputation after a series of scandals in its retail bank, in which the company has admitted to opening unauthorized customer accounts and overcharging borrowers for auto insurance.
Until news of the latest scandal broke two weeks ago, Wells’ commercial banking division had been largely unscathed by the company’s reputational problems.
During the wide-ranging presentation Thursday, Sloan reiterated that customers were not put at risk as part of the incident. He also said misaligned incentive compensation — a root problem in its retail banking woes — was not a factor.
At one point, Sloan was asked why he is the best person to fix Wells’ troubles, given that he is a longtime company insider. Sloan joined the company in 1987 and was appointed as CEO in the fall of 2016 after the resignation of John Stumpf.
Defending his tenure, Sloan pointed to the “fundamental changes” that the company has made over the past two years. He also praised his executive management team for their work in helping the company move past its recent troubles.
“One person cannot solely manage Wells Fargo, given our scale and our customer base,” he said. “It’s a big team effort.”
Sloan also attempted to deflect the question with humor.
“If I ask my mom and dad, they would think I’m the best, right?” he said jokingly, drawing no reaction from the crowd. “What? I get nothing for that? God. Thank you."