Wells Fargo said Tuesday its chairman will step down, the latest change at the top of the bank as it reels from a major sales scandal.
The San Francisco-based bank announced that board member Elizabeth Duke, 65, will succeed Chairman Stephen Sanger effective Jan. 1, in addition to other changes being made to the board. The move puts Duke, a former Federal Reserve governor and Wachovia executive, in the most powerful board seat at a bank dealing with a growing raft of scandals.
Wells had been expected to make a board shake-up in the coming weeks, likely resulting in the exit of Sanger. Duke, currently vice chair, had been expected to replace Sanger.
In a statement, Sanger, 71, called Duke the “unanimous choice” to head the board “as it continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers and other stakeholders.”
Support for the board has been tepid amid growing problems at the San Francisco-based bank, which has its largest employment hub in Charlotte.
Sanger, named to the bank’s board in 2003, has served as chairman since former CEO and Chairman John Stumpf left the bank last October amid a major scandalover fake accounts. Sanger is a retired chairman and CEO of cereal maker General Mills.
One of those scandals involves revelations last September that Wells Fargo employees, rushing to meet aggressive sales goals, for years opened more than 2 million accounts that may not have been authorized by consumers. Wells Fargo has pushed to repair its image after paying $185 million in fines, but new revelations have created challenges.
More recently, the bank disclosed that an expanded review of its sales practices is expected to identify a “significant increase” in the number of potentially unauthorized accounts employees created over an eight-year period. In the same disclosure, Wells said it had identified “certain issues” involving a type of auto insurance, noting the finding could result in customer refunds.
Revelations of that insurance matter came only about a week after the bank admitted other problems over auto insurance. In that scandal, Wells said hundreds of thousands of customers may have been charged premiums for insurance they didn’t need, a practice that may have contributed to vehicle repossessions. The bank has since apologized to customers and said it will provide approximately $80 million in remediation.
Some members of Congress, including Massachusetts Democratic Sen. Elizabeth Warren, have urged new hearings into the bank’s practices. Those calls come less than a year after Stumpf was grilled by Warren and other lawmakers on Capitol Hill.
Wells Fargo has said that “in response to feedback” received at the April meeting, the board is “engaging in an ongoing comprehensive review of its structure, composition and practices.” The review is expected to result in “actions” in the third quarter of this year, the disclosure said without giving specifics.
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