In a bid to rebuild its image, Wells Fargo & Company (WFC - Free Report) has created a strategic execution and operations unit. Through this unit, it seeks to meet demands of several regulators and compliance officers, who remain unsatisfied with the bank's remediation moves after a horde of scandals.
The leadership role of the new unit has been offered to a 21-year veteran of Wells Fargo, Derek Flowers, per an internal memo sent by acting CEO Allen Parker and seen by the Financial Times. Currently, Flowers as chief credit and market risk officer oversees credit risk throughout the bank's lending activities, which has kept him in contact with regulators.
The new unit will focus exclusively on Wells Fargo’s regulatory priorities, i.e., “strengthening and driving the implementation of certain business and risk-management processes”. Also, Parker will be responsible for updating business and risk-management processes frequently.
Post break out of the bogus account scandal in late 2016, Wells Fargo has been involved in a number of probes and continues to encounter problems in its operations. In first-quarter filing, it disclosed to have wrongly charged fees to some customers on account of confusion about the types of transactions counted toward the minimum usage of debit cards that would have waived service fees.
Also, it continues to struggle with asset cap that the Federal Reserve had imposed in February 2018, which is not likely to be lifted anytime soon.
Further, the bank has consistently failed to impress the Fed, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau with its remediation plans and other progresses, and has faced public criticism.
With the creation of this new unit, the interim CEO plans to "redouble" Wells Fargo’s initiatives to satisfy and exceed regulatory expectations. Also, it would help instill confidence in the regulators regarding the bank’s efforts to move past previous wrongdoings.
Though Wells Fargo’s cost-control plans and efforts to enhance customers experience seem impressive, the company still has to look out for a CEO, who can be trusted with the responsibility to turnaround the bank.
Shares of Wells Fargo have lost 10.2% over the past six months against 1.2% growth recorded by the industry.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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