Wells Fargo Chief Executive John Stumpf announced his retirement on Wednesday, following mounting pressure in the wake of recent scandal surrounding the bank.
Last month Wells Fargo was hit with a $185 million fine and “widespread illegal practice” by US regulators. More than 5,000 employees have been fired over their involvement in the the creation of false accounts in the name of Wells Fargo customers. Prior to the scandal and the issuing of the considerably large fine, Wells Fargo was considered the most valuable banking firm globally.
Stumpf will be replaced by the bank’s Chief Operating Officer Tim Sloan, and will not receive a severance package. The bank’s previous head of retail operations (and the division in which the malpractice took place, Carrie Tolstedt) has forfeited $19 million of bonuses, also leaving without financial compensation. However, Stumpf retains an estimated $28 million of retirement benefits and about $110 million in stock that he owns both directly and through the means of a family trust.
“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside,” Stumpf said in a statement.
In an interview on Wednesday, replacement Tim Sloan said his predecessor had decided to relinquish his position “without any pressure from the board … It’s an incredibly selfless act when you think about it.”
“He felt that he’d become a distraction. There was so much focus on John. That’s not what Wells is about. What Wells is about is serving its customers.”
The Senate Banking Committee have conducted extensive investigations into the matter, with Carrie Tolstedt and John Stumpf both giving testimonies.
After mounting pressure from Washington and US regulators, the bank is investigating allegations of malpractice following the opening of over two million false accounts in customers names without their approval.