Finance

Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

It's just so Wells Fargo. Even when the bank tries to do something right, it falls short.

The scandal-plagued lender is reportedly planning a board shake-up that could see Chairman Stephen Sanger step down. It's something I've previously called for on multiple occasions and is a nudge, if not a step, in the right direction. In fact, considering so few changes are reportedly in the works, calling it a "shake-up" at all may be generous. 

According to the Wall Street Journal, decisions about any changes haven't been finalized and won't be until at least Labor Day. After that, Sanger may then step down at some stage before next spring. The delay indicates a lack of conviction from the board, which is troubling when you consider it has had months to digest the dismal shareholder support many of its directors received at its annual general meeting in April.

Au Revoir
I've previously suggested Wells Fargo should cull between two to six of its least-supported directors. It's moving in the right direction, but could do more.
Source: Wells Fargo

It's also disappointing that Wells Fargo reportedly isn't considering replacing any other of its directors -- the bank is simply happy to let them hang around until they hit the mandatory retirement age of 72. Plus, risk committee chairman Enrique Hernandez, who scraped through with the narrowest of margins -- receiving just 53 percent of shareholder votes back in April -- appears likely to remain on the board although his role is being "discussed." 

Still, Sanger's potential departure creates room for at least one director, and the need for a fresh perspective reportedly has the board aiming to make room for three new faces before next spring. But Wells Fargo investors shouldn't expect one of these to be Warren Buffett or another a representative of Berkshire Hathaway Inc., its biggest shareholder. Why? As Buffett himself has explained, he can't talk to the board -- let alone be on it  -- because doing so would risk resulting in the Federal Reserve designating Berkshire a bank holding company, with a regulatory burden the conglomerate doesn't want.

Wells Fargo's shares actually slipped a touch lower in Thursday afternoon trading, consolidating a slide in recent weeks that has been fueled by new auto-insurance missteps and fears its fake-accounts scandal could cost it more in legal costs than first thought.

It's a little comforting the bank has realized it needs to take some sort of real action to boost investor confidence. Still, it's just not enough.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Speaking of Buffett, I've previously pointed out that Berkshire actually did its fellow Wells Fargo shareholders a disservice. If it hadn't voted all its shares in favor of the board in April, at least four existing board members would have already been shown the door. 

To contact the author of this story:
Gillian Tan in New York at gtan129@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net