Wells Fargo chief Tim Sloan on Thursday downplayed the financial damage from the bank's phony-accounts scandal and insisted there is still a role for cross-selling if conducted properly.
Speaking at an industry conference in Boston, Sloan said that Wells has seen "good performance" outside of its embattled retail unit in the fourth quarter even as the fallout from the cross-selling fiasco has continued. Later this month the company will begin providing monthly updates to investors on a range of mid-fourth-quarter metrics, including branch traffic and new consumer accounts, he said.
Sloan — who was named chief executive last month — also defended the practice of cross-selling, saying that it remains a critical part of Wells Fargo's growth strategy. While the San Francisco company eliminated product sales goals for branch employees last month, it will not abandon its "cross-sell focus" anytime soon.
"There's nothing wrong with cross-selling done right — it's about growing customer relationships, serving our customers, meeting their needs," Sloan said. "Having said that, there's no question that there's a risk of over-correcting."
Wells Fargo agreed in September to pay $190 million to settle charges that 5,300 branch employees created roughly 2 million sham accounts to collect bonuses.
In a regulatory filing Thursday, Wells said that the Securities and Exchange Commission is currently investigating disclosures surrounding the company's sales practices. That's in addition to 15 state and federal agencies that have launched their own probes.
Wells Fargo also said in the filing that it had boosted the high end of its estimate of "reasonably possible potential litigation losses" by 70%, to $1.7 billion.
During the presentation Thursday, Sloan and Mary Mack — who took the helm of Wells' community banking unit in July — described the scandal as having a minimal-but-notable impact on the performance of the retail bank.
The total number of checking accounts opened at Wells Fargo branches plunged 30% in September from the prior month, amid a decline in branch traffic. Checking account closures increased by 1%.
Still, the total number of primary checking account customers and active digital users held steady, both at about 27 million.
Additionally, Wells continues to contact customers who recently opened credit card accounts but never activated their cards. Approximately 25% of customers contacted so far have said they did not recall applying for a credit card in the first place, Sloan said.
Sloan also offered a note of caution on the data Wells Fargo presented Thursday, noting that it covers performance through Sept. 30 — only three weeks after the settlement was announced.
The scandal, of course, snowballed into October — and the ongoing reputation damage could have lasting effects. John Stumpf, the former CEO, stepped down on Oct. 12. Both Stumpf and Carrie Tolstedt — the former head of community banking — were subject to clawbacks in their bonus pay.
Meanwhile, Wells continues to face a bruising reputational battle.
"The business trends we have highlighted only reflect the near-term effects, and it's still too early to determine the longer effects on customer activity," Sloan said.
The company is also "actively reaching out" to any employees who were inappropriately fired, including those who were let go for missing their sales goals. The effort is part of Wells' ongoing review of its sales practices, he said.
"If anybody was let go inappropriately, and is interested in coming back, we'd like to have them back," Sloan said. He declined to share the number of employees who are eligible to be rehired, saying that the company needs to "have a conversation" about whether it will publish that information.
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Corrected November 3, 2016 at 11:42AM: An earlier version of this story said Wells Fargo had increased its legal reserves by 70%; in fact, the increase came in its estimate of potential litigation losses.