By Imani Moise
(Reuters) - After a difficult, months-long search for a new chief executive, scandal-plagued Wells Fargo & Co <WFC.N> named as its next leader Charles Scharf, a one-time Jamie Dimon protégé known on Wall Street as a detail-oriented number cruncher who excels in streamlining operations.
Scharf, 54, who joins the fourth-largest U.S. bank next month, has been the CEO of Bank of New York Mellon <BK.N> and Visa Inc <V.N>.
He served as a top lieutenant to JPMorgan Chase and Co’s <JPM.N> Dimon during the financial crisis of 2008. He will become Wells Fargo's third CEO in as many years after a wide-ranging sales practices scandal.
Some analysts said Scharf's departure from Bank of New York Mellon, where he served only for two years, would hurt the custodian bank. Bank of New York Mellon named former finance head Thomas Gibbons as its CEO on an interim basis. Its shares closed 4.2% lower, while Wells Fargo rose 3.5% on Friday.
"He's a good choice," said former Wells Fargo CEO Dick Kovacevich. "He's very experienced in almost all of these financial services areas."
Scharf has his work cut out for him.
Wells Fargo is operating under a regulatory microscope, as it tries to rebuild its reputation with customers, investors and politicians after employee whistleblowers revealed in 2016 that the bank had opened potentially millions of unauthorized accounts.
Since then, internal and regulatory probes have discovered other issues in the bank’s businesses, resulting in billions of dollars in fines and penalties.
Its core businesses and shares have lagged.
From 2016-2018, Wells Fargo was the only bank among the top four U.S. lenders to not grow loans or deposits, according to Refinitiv data. Wells Fargo shares have fallen short of the KBW Bank Index as the board looked for a new CEO. Analysts cited uncertainly about management and future financial targets as a top concern.
On Friday, Wall Street analysts applauded the bank’s pick but warned that major regulatory hurdles remained.
"The appointment of Mr. Scharf removes a major overhang," Saul Martinez of UBS wrote in a note to clients.
While the news cheered Wells Fargo investors, analysts said it was a negative for Bank of New York Mellon.
KBW analyst Brian Kleinhanzl said he was unsure what to expect from Scharf as Wells' CEO since his tenure at Bank of New York Mellon lasted only for two years.
He added that at Bank of New York, Scharf had gone “on a hiring spree to bring in his people, and now that he has left, long-term strategy is in flux.”