Scharf says he became psychological as $1.95 trillion possession cap raised

Focus shifts to growth in charge card, investment banking

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Wells Fargo shares rise nearly 9% this year

By Nupur Anand, Lananh Nguyen

NEW YORK CITY, June 4 (Reuters) - Wells Fargo CEO Charlie Scharf understands he has a track record for sternness, but he said that when the bank was lastly freed of a $1.95 trillion asset cap by regulators on Tuesday, he became emotional.

"Everyone thinks that I'm this difficult, hard person ... however it's been so long in the making, it's impacted numerous individuals so negatively," Scharf stated. "All of an abrupt, it's like it's all deserved it and everybody's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to repair its deeply established issues from a fake-accounts scandal that erupted in 2016. The bank faced a public outcry, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's decision to raise one of Wells Fargo's last major penalties this week has actually mostly closed that chapter in its history. It also cements Scharf's legacy after an intense turnaround in which he upgraded management, slashed headcount and shed services.

"I feel fantastic," Scharf informed Reuters in an extensive interview on Wednesday after being swamped by congratulatory messages from staff members and equivalents at other banks.

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

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

As Wells Fargo aims to increase incomes, it prepares to raise its dividend to keep payments constant for investors, Scharf stated. Share buybacks will continue, but their rate will most likely slow as the bank invests in development, he said.

Scharf, who formerly ran BNY and Visa, took over scandal-plagued Wells Fargo after his 2 predecessors were ousted. He installed new management, slashed more than 55,000 jobs, exited unprofitable businesses and reworked the bank's threat management and controls. In an effort to change its culture, he likewise remodelled the company's efficiency review procedure to improve responsibility.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having actually climbed up more than 8% so far this year as investors ended up being more positive about the bank shedding its regulatory luggage.

"The pressure, by the method, for me - it doesn't disappear, it simply changes" from focusing on historic issues 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 fun."

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

REACTIONS

I feel excellent. I felt a little emotional the other day. Everyone believes I'm this hard, hard person, and I'm not in fact. It's been so long in the making, it's impacted numerous people so negatively. And I began getting notes right away from everybody, however specifically individuals who work here. I would say 80% of them, 75% of them were about their experience here over an amount of time and how proud they are now, and grateful. Twenty percent were about the $2,000 (stock award) we were giving them.

Suddenly, it's like it's all deserved it and everybody's feeling it. It's everyone, and I actually do think that everyone who is here has been impacted by the work. Some straight, because they needed to do it, however even just individuals having to talk to their friends and family on weekends about Wells Fargo news, and why do they still work here? You put individuals through a lot.

GROWTH AREAS

I would expect that across all the staying services that we have, with the small exception of our mortgage service, all have chances to grow and produce higher returns.

So it's real of the wealth organization 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 holds true in our organization, and very importantly, it's real in our consumer and small company banking organization, where they were most impacted by the sales practice scandal. We're just presenting disciplines back to be able to serve customers more broadly and grow in manner ins which we haven't had the ability to.

People constantly ask me, "What are the leading three priority locations for development?" And I attempt not to answer the question, since I truly believe every industry has an opportunity.

ACQUISITIONS

Not on the short list right now. At some time, capabilities around payments, around benefits, around the movement of securities, would we want to take a look at something like that? Sure. But we haven't even begun to believe about 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 ways, it's a totally various business. The culture is various here, it's not a "me" culture. People wish to be dealt with fairly, they desire to be paid relatively, however they come here because they desire to work together. That is extremely important.

Carried to a severe, it hurt us since we didn't make tough decisions about individuals, we didn't challenge things. But I do believe a culture like that, in a well balanced way, is amazing to have. It takes a very long time to construct.

We have genuine responsibility in the company, which's those that's positive, that's unfavorable, but it likewise brings with it a strong desire to assist people get much better.

It's much more of a meritocracy. Nothing's best. We've still got a ways to go, but it drives performance. Every senior leader is expected to be associated with an in-depth way in both the strategy and the execution of their business strategy.

HEADCOUNT

We're including bankers, sales people, relationship managers in the business bank, innovation resources. We're just funding it through performances that we're getting in other places. There's considerable opportunities to end up being more effective.

BUYBACKS AND DIVIDENDS

We've been purchasing a great deal of stock back, and I prepare for that we'll continue to purchase stock back. So on the dividend, what we wish to be able to do is increase the incomes capacity of the company (and) increase the dividend to keep a relatively consistent payment ratio. We hope to have the ability to consistently increase the dividend at a sensible level.

Hopefully we'll have more chances to invest inside the company so we'll likely buy less stock back than we had.

FUTURE PLANS

(Scharf's hobbies include 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 difficult, I'm not going to feel any less pressure. I'll most likely have more fun.

INDUSTRY REACTION

I have actually heard from almost all the big banks' CEOs congratulating us. When you're on the inside of these things, you understand how difficult they truly are and what it takes. Folks have said it's excellent for the market. A strong Wells Fargo, without those constraints, allows Wells to be able to support development. And although we're all extremely competitive, a strong U.S. is a good thing.

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