NEW YORK - Newly appointed Wells Fargo (WFC) Chief Executive Tim Sloan told employees Tuesday he’s “sorry for the pain” that the bank’s employees have suffered as a result of the company’s sales practices scandal.
Sloan’s companywide speech, given Tuesday in Charlotte, North Carolina, is the latest effort by Wells Fargo’s executives to atone for the fact that the bank’s employees, pushed to the limit by impossible sales goals, opened as many as 2 million bank and credit card accounts without customers’ authorization.
In the speech, Sloan acknowledged that the bank didn’t respond to the problems in its branches soon enough and that upper management dodged responsibility for the bad behavior and wrongly placed blame on branch employees. Wells fired roughly 5,300 employees as a result of the scandal, the vast majority of them lower-level workers.
“Many felt we blamed our team members. That one still hurts, and I am committed to rectifying it,” Sloan said.
Wells Fargo is enveloped in the biggest scandal in its 164-year history, which earlier this month forced the abrupt retirement this month of its CEO, John Stumpf. The bank faces several class-actions, as well as criminal investigations by the Department of Justice and the California Attorney General’s Office.
Even in this bitterly divided election season, members of Congress have found bipartisan unity in their disdain for Wells Fargo and its sales practices.
There are also signs that customers are leaving the bank, or at least paring back their business with Wells. In its quarterly earnings report released this month, Wells reported double-digit percentage drops in bank account openings, as well as declines in bank branch traffic.
While Wells Fargo has been apologetic to the media, its customers and livid politicians, it had done little to make amends with its roughly 260,000 employees. The outrage grew after Stumpf did media interviews in which he appeared tone-deaf and seemed to blame employees, who often earn less than $15 an hour, for what happened. It took Stumpf being summoned before Congress to publicly apologize for the bank’s behavior.
Then came reports from Wells Fargo employees that they were retaliated against for trying to raise awareness of the sales practices through the bank’s internal ethics hotline. Employees also told of developing stress-related health problems. In the speech, Sloan called the reports of retaliation “disturbing.”
Along with his early departure, Stumpf was forced to give up $41 million in stock awards as punishment for the bank’s behavior. However, he’s still walking away with tens of millions of dollars in salary he earned as CEO.
Acknowledging that Wells’ troubles are far from over, Sloan warned employees more difficult days could be ahead.
“You also should expect more tough headlines, as additional accountability actions occur, and other investigations and reviews are completed. Some of that is going to be very painful for us,” Sloan said.
The speech comes as Wells Fargo launched a new TV advertising campaign this week to address the scandal. The ads, which began Monday, are being rolled out nationally on major network evening newscasts as well as the Sunday talk shows. Wells is also buying ads on the major Spanish language networks Telemundo and Univision, said bank spokesman Mark Folk.
“My primary objective is to restore trust in Wells Fargo -- restore pride in our company and mission,” Sloan said. “That may seem like a long ways off today, but I promise you we will.”