With a new move, Wells Fargo (WFC - Free Report) recently came up with the planned appointment of a number of business leaders with revised business organizational structure. The latest structure will provide leaders with apparent authority, accountability, and responsibility with five line of business CEOs. Notably, each CEO will be accountable to Wells Fargo CEO Charlie Scharf and represented on the company’s Operating Committee.
The consumer bank will be divided into a consumer lending division and a retail banking division, while the wholesale bank will be split into a commercial banking unit, and a corporate and investment banking unit. However, the wealth management unit remains intact.
Reorganization in Detail
The changes will be as follows: Mary Mack, leader of Consumer Banking, has been appointed as the CEO of Consumer and Small Business Banking looking over the Branch Banking and Small Business. This line of business includes the company’s 5,400 branches offering deposit, lending, investment, and payment products. Moreover, deposits and a newly-formed Digital team to interact with clients digitally will be looked after by Mack.
Perry Pelos, who was leading Wholesale Banking, has been transitioned as the CEO of Commercial Banking. He will cater both relationship and product responsibilities as well as serve businesses with annual sales of more than $5 million. This apart, the responsibility of Commercial Capital, Treasury Management, Business Banking, Middle Market Banking, and Government and Institutional Banking will be held by Pelos.
Further, Jon Weiss, now appointed for a new role as the CEO of Corporate & Investment Banking (CIB) was previously leading Wealth & Investment Management. Notably, CIB was previously part of Wholesale Banking. The newly-formed business line for CIB will focus on supporting the capital market, banking, and investment needs of Wells Fargo’s corporate, government, and institutional clients. In addition, Commercial Real Estate will come under CIB and Weiss will also be catering services to international client businesses and their operations.
Wealth & Investment Management serving with personalized wealth management, investment, asset management, and retirement products and services to clients across its businesses including Wells Fargo Advisors, The Private Bank, Abbot Downing, and Wells Fargo Asset Management will be led temporarily by Weiss until the appointment of a new CEO.
Mike Weinbach will be joining Wells Fargo in early May and act as CEO of Consumer Lending which serve clients in fulfillment of their financial needs. Home Lending, Auto, Credit Cards & Merchant Services, and Personal Loans will be accounted by Weinbach. Notably, Mack will be leading Consumer Lending on an interim basis till Weinbach joins.
Also, Wells Fargo is on the verge of making certain fundamental changes in the company’s operations in order to strengthen its services for clients and customers, driving operational excellence and executing on its regulatory priorities. Additionally, for digital customers’ needs, a new Strategy, Digital Platform & Innovation group has been created.
Need of Revamping of Segments
"The Wells Fargo franchise has extraordinary opportunity and power, and these organizational changes enable us to more effectively pursue our goals and take advantage of the opportunities in front of us," Scharf noted. "These changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work. I am confident that this organizational model and our strengthened risk and control foundation will bring greater focus and accountability to the company," Scharf further stated.
CEO Charlie Scharf is expediting efforts to revamp the bank. We believe execution of the restructuring moves will support the company’s prospects.
At present, Wells Fargo carries a Zacks Rank #3 (Hold). Shares of the company have gained around 4.4% in the last six months compared with 18.8% growth registered by the industry.
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