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By Imani Moise and David Henry
(Reuters) - Wells Fargo & Co said on Thursday Tim Sloan will resign immediately as chief executive, becoming the second CEO to leave the bank in the fallout of a wide-ranging sales practices scandal.
The board said in a statement it concluded it was best to seek an outside candidate to replace Sloan. The bank's general counsel, C. Allen Parker, one of the few newcomers in the bank's top ranks, will serve as interim chief executive.
The move amounted to an admission that the board erred three years ago by appointing another insider after the previous CEO, John Stumpf, resigned following revelations that Wells Fargo had opened potentially millions of unauthorized consumer accounts. Prior to becoming CEO, Sloan served as chief operating officer and head of the wholesale bank.
In a Thursday conference call, Sloan, 58, said he decided to leave because the focus on him had become a distraction inhibiting the bank from moving forward.
"I want to assure all of our stakeholders that this was my decision and is not related to our first-quarter financial performance, the long-term outlook for the company or any newly discovered issues," he said.
On the call, analysts tried unsuccessfully to get a direct answer to whether regulators had given Sloan the final push, or even whether the bank had been surprised by the most recent criticism from the Comptroller of the Currency.
Board Chair Betsy Duke declined to say what qualifications directors want in the next CEO, including whether they will insist on having an executive with banking industry experience. She said the person will be someone who really wants "the challenge and the opportunity...That is the person we want."
She added the bank has not yet spoken with anyone regarding the CEO position, and the search committee will meet for the first time on Friday. As recently as a week ago, the board had reiterated its unanimous support for Sloan.
Critics had accused Sloan, who was part of the management team while the wrongdoing was happening, of being too entrenched in Wells Fargo's culture to change it, even as the bank tried to do just that and move past its scandals.
In March 2018, the U.S. Federal Reserve imposed an unprecedented asset cap on Wells Fargo, barring it from growing its balance sheet until it improved risk management controls. Wells Fargo has said it expects to operate under the cap for the remainder of the year.
It is not yet clear what was the final straw for Sloan. However, the banks primary regulators, the Office of the Comptroller of the Currency and the Federal Reserve, criticized the bank in recent weeks. "What happened at Wells Fargo really was a remarkably widespread series of breakdowns really in their risk management apparatus," Fed Chairman Jerome Powell said.