Wells Fargo Circles the Wagons: Communicating During a Crisis

In October 2016, Timothy Sloan, the newly appointed CEO of American banking giant Wells Fargo, faced a massive public-relations crisis. A few weeks earlier, a United States government agency had announced the results of its regulatory review of the bank and exposed a shocking practice common in the retail division, in which aggressive community bankers had created more than a million fraudulent accounts and credit card applications on behalf of unaware customers for the past several years. Over the next few weeks, the bank—and Sloan's predecessor, John Stumpf, in particular—suffered from harsh criticism from politicians, journalists, and former employees alike, ultimately forcing Stumpf's resignation. As Sloan sought to minimize the public-image backlash and restore general trust in Wells Fargo, he struggled to construct the best communication strategy for the bank's next chapter. Excerpt UVA-BC-0263 Rev. Sept. 28, 2018 Wells Fargo Circles the Wagons: Communicating during a Crisis Two days after suddenly being named CEO of a scandal-ridden Wells Fargo & Company (Wells Fargo), Timothy Sloan found himself rattled by a quarterly conference call that he and his CFO, John Shrewsberry, had just conducted for inquisitive investors on the morning of October 14, 2016. Sloan's predecessor, former CEO and chairman John Stumpf, had just resigned from both posts at the bank two days earlier. His resignation became inevitable after a month of enduring critiques and shakedowns from politicians, journalists, former employees, and bank customers in response to September's exposure of the bank's intense corporate sales culture that had driven thousands of community bankers to open more than a million fraudulent accounts and more than half a million credit card applications for unaware customers since 2011. Although Sloan's intention going into the update call was to convey “continued strong financial results” at the bank and an action plan for recovering from the account crisis that had put the bank at the center of a public-relations nightmare, not every listener to the call was satisfied with the corporate presentation. Despite multiple corrective policy changes at Wells Fargo (which had been announced over the past few weeks and reiterated once again during that morning's presentation), in addition to the management shake-up initiated by Stumpf's resignation, many stakeholders were still left unsatisfied and unclear of future plans. One analyst, Mike Mayo from CLSA Limited, took the opportunity to grill Sloan and Shrewsberry during the Q&A section at the end of the call: Mike Mayo: Of the 115,000 accounts that were open without authorization and charged a fee, how many customers did those 115,000 accounts reflect? And what's been your retention rate of those customers? . . .