Wells Fargo, under fire from all sides because of a long-running scandal in which employees set up illegal accounts to meet sales quotas, announced a restructuring of its top management on Monday, solidifying the leadership structure beneath Timothy Sloan, who is widely expected to succeed John Stumpf, the bank's embattled chairman and chief executive.
The changes, to take effect on Nov. 1, will place a number of top executives directly under the purview of Sloan, a 29-year company veteran who was promoted last November to Wells Fargo's No. 2 spot, becoming the bank's president and chief operating officer.
Sloan, who has been head of Wells Fargo's wholesale banking division — which does business with companies and organizations, not personal account holders — has been largely insulated from the scandal engulfing the company's retail banking group. That division has been in crisis mode since Wells Fargo agreed last month to pay $185 million in penalties for fraudulently opening as many as 2 million bank and credit card accounts that may not have been authorized by customers.
Sloan's boss, Stumpf, has been under heavy fire since the illegal acts came to light. At two congressional hearings last month, many lawmakers called for his ouster.
As part of the reshuffling, which the bank said was not related to the issue of the illegal accounts, Wells Fargo created a new division focused on "payments, virtual solutions and innovation."
The broadly defined group, — which includes the bank's operations, consumer credit cards, research and development, deposit and payments teams — will be led by Avid Modjtabai, who had been in charge of Wells Fargo's consumer lending division. One of the group's priorities will be Wells Fargo's digital and mobile banking products.
"Any way that a customer can make a payment is going to get moved under this group," said Catherine Pulley, a company spokeswoman.
Franklin Codel, who currently runs home lending for Wells Fargo, will take over Modjtabai's consumer lending duties, while Perry Pelos, a longtime deputy to Sloan, will succeed him as Wells Fargo's head of wholesale banking.
As part of Monday's restructuring, Wells Fargo said it would expand the bank's operating committee from nine to 12 members. Codel and Pelos will join the group, which is led by Stumpf, along with Mary Mack, who was promoted in July to take over the troubled community banking division.
That group's previous head, Carrie Tolstedt, left Wells Fargo under pressure and agreed to surrender stock grants valued at $19 million. Stumpf, at the same time, agreed to surrender $41 million in unvested equity awards as well as to forgo his salary and bonus.
Monday's reshuffling moved several executives and corporate functions out of the community banking division and into the new payments group. Ed Kadletz, the bank's head of deposit products, is shifting over, as is Jim Smith, who oversees Wells Fargo's digital and mobile channels, including its customer service contact centers. Teams from other parts of the bank, including segments of its consumer lending and wholesale division, are also being moved to the new group.