CEO Sloan cites efforts well underway to enhance company’s compliance and operational risk management program
Wells Fargo & Company (NYSE: WFC) announced it is confident it will
satisfy the requirements of the consent order it agreed to today with
the Board of Governors of the Federal Reserve System. Under the consent
order, the company will provide plans to the Federal Reserve within 60
days that detail what already has been done, and is planned, to further
enhance the board’s governance oversight, and the company’s compliance
and operational risk management. The order also provides for third-party
reviews of such plans and, until they are approved and implemented,
limits on the growth of the company’s total consolidated assets to the
level as of December 31, 2017.
“We take this order seriously and are focused on addressing all of the
Federal Reserve’s concerns,” said Timothy J. Sloan, Wells Fargo’s
president and chief executive officer. “It is important to note that the
consent order is not related to any new matters, but to prior issues
where we have already made significant progress. We appreciate the
Federal Reserve’s acknowledgment of our actions to date. In addition,
the order is not related to Wells Fargo’s financial condition -- we
remain in a strong financial position and stand ready to serve the
varied financial needs of our customers.”
“Our board is committed to meeting the expectations of our regulators
and protecting and serving the interests of our shareholders, customers,
team members and the community,” said Betsy Duke, independent chair of
Wells Fargo’s Board of Directors and a former member of the Board of
Governors of the Federal Reserve. “Every change we’ve made over the past
year reflects this and the valuable feedback of investors and
stakeholders. Moving forward, we’ll continue to be focused on
maintaining an appropriate mix of professional experiences and diverse
perspectives necessary to govern a franchise as important as Wells
Fargo.”
The Federal Reserve’s consent order – which recognizes that the company
already has implemented improvements in its governance and risk
management – includes the following requirements:
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Within 60 days:
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The company’s board will submit a plan to further enhance the
board’s effectiveness in carrying out its oversight and governance
of the company.
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The company will submit a plan to further improve the company’s
firm-wide compliance and operational risk management program.
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After Federal Reserve approval, the company will engage independent
third parties to conduct a review to be completed no later than
September 30, 2018 to confirm adoption and implementation of the plans.
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The asset limitation will remain in effect until third-party reviews
have been completed to the satisfaction of the Federal Reserve.
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After removal of the limits on asset growth, a second third-party
review will be conducted to assess the efficacy and sustainability of
the risk management improvements.
“While there is still more work to do, we have made significant
improvements over the past year to our governance and risk management
that address concerns highlighted in this consent order,” Sloan said.
These actions have included:
Board governance:
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Separating the roles of chairman and CEO and amending the company’s
by-laws to require an independent chair.
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Electing six new independent directors in 2017 as five directors
retired, bringing to eight the total number of directors elected since
2015, and planned refreshment of an additional four directors in 2018,
with the retirement of three of those directors occurring by the time
of our 2018 Annual Meeting of Shareholders.
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Enhancing the overall capabilities and experience represented on the
board, including financial services, risk management, cyber,
technology, regulatory, human capital management, finance, accounting,
and consumer and social responsibility.
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Reviewing the board’s committee structure and leadership, amending
committee charters to enhance risk oversight, and refreshing the
chairs of certain key committees, including the Risk Committee and
Governance and Nominating Committee.
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Conducting a board self-evaluation in 2017 facilitated by Mary Jo
White, a senior partner at Debevoise & Plimpton LLP and former chair
of the Securities and Exchange Commission. The self-evaluation
informed the board’s changes in its structure, composition and
governance practices.
Risk management:
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Centralizing critical control functions (including Human Resources,
Finance, and Technology) to improve enterprise visibility, consistency
and control.
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Centralizing all risk management functions to accelerate the design
and implementation of a fully integrated operating model for risk
management.
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Developing and executing comprehensive plans that addressed our
compliance and operational risk management programs, organizations,
processes, technology and controls.
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Hiring external talent for critical risk management leadership roles –
chief operational risk officer, chief compliance officer and head of
regulatory relations (newly created).
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Forming new centralized enterprise functions dedicated to key risk
control areas, including the Conduct Management Office (January 2017),
Enterprise Data Management function (September 2017) and Comprehensive
Customer Remediation Group (November 2017).
Conference Call
The company will host a live conference call on February 2, 2018, at
4:30 p.m. PT (7:30 p.m. ET) to discuss the consent order. The live audio
webcast will be available at the following address: https://engage.vevent.com/rt/wells_fargo_ao~9499813.
You also may participate by dialing 855-604-1135 (U.S. and Canada) or
574-990-3591 (International).
Please find below a link to an investor deck for the call.
A replay of the conference call will be available beginning at 7:30 p.m.
PT (10:30 p.m. ET) on Friday, February 2, 2018, through Friday, February
16. Please dial 800-585-8367 (U.S. and Canada) or 404-537-3406
(International) and enter Conference ID #9499813. The replay will also
be available online at https://www.wellsfargo.com/about/investor-relations/events/
and https://engage.vevent.com/rt/wells_fargo_ao~9499813.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $2 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investments, mortgage, and consumer and
commercial finance through more than 8,300 locations, 13,000 ATMs, the
internet (wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business in
the global economy. With approximately 263,000 team members, Wells Fargo
serves one in three households in the United States. Wells Fargo &
Company was ranked No. 25 on Fortune’s 2017 rankings of America’s
largest corporations.
Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements about our future
financial performance and business. Because forward-looking statements
are based on our current expectations and assumptions regarding the
future, they are subject to inherent risks and uncertainties. Do not
unduly rely on forward-looking statements as actual results could differ
materially from expectations. Forward-looking statements speak only as
of the date made, and we do not undertake to update them to reflect
changes or events that occur after that date. For information about
factors that could cause actual results to differ materially from our
expectations, refer to our reports filed with the Securities and
Exchange Commission, including the “Forward-Looking Statements”
discussion in Wells Fargo’s most recent Quarterly Report on Form 10-Q as
well as to Wells Fargo’s other reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2016,
available on its website at www.sec.gov.
