Wells Fargo & Co. (WFC:US)’s management shuffle, in which Chief Financial Officer Timothy Sloan becomes the head of wholesale banking, is a move analysts view as grooming for the bank’s top job.
The lender also named John Shrewsberry to replace Sloan, 53, as CFO on May 15 and report to Chief Executive Officer John Stumpf, the San Francisco-based bank said yesterday in a statement. Sloan takes over wholesale banking from David Hoyt, 58, who will retire after 32 years at the company.
“Tim Sloan is an up-and-comer,” Jennifer Thompson, an analyst at Portales Partners LLC, said in a phone interview. “It appears he has gotten onto a little bit of a faster track by becoming head of a large business line. You need that kind of line experience if you are going to be considered for a bigger spot, namely the CEO.”
Wells Fargo, the biggest U.S. home lender, had a record profit in 2013. It passed the Federal Reserve stress tests last week and was cleared to lift its quarterly dividend, which it increased by 5 cents to 35 cents a share.
Sloan has been CFO since 2011 and Shrewsberry, 48, has overseen the investment-banking, capital markets, trading and research businesses since 2006, the bank said. Hoyt has run wholesale banking for the last 16 years, according to the statement. The unit accounted for about 37 percent of the firm’s $21.9 billion in 2013 profit.
The appointments “represent a natural evolution of executive responsibilities,” Stumpf, 60, said in the statement. “They also demonstrate the deep bench of high-caliber leaders at Wells Fargo.”
Hoyt has been considering retirement for some time and shared his decision with senior managers on March 31, according to Mary Eshet, a bank spokeswoman. Eshet declined to comment on analysts’ interpretation about Sloan’s CEO prospects, and said the bank hasn’t named a replacement for Shrewsberry.
This is part of “a normal rotation that they have from time to time in their senior management team,” Marty Mosby, an analyst at Guggenheim Securities LLC, said in an interview. “Returning to the business unit helps his overall experience base,” he said of Sloan.
Wells Fargo gained 3 cents to $49.77 in New York. The shares have climbed 35 percent in the past year, outpacing the 30 percent advance of the 24-company KBW Bank Index. (BKX)
Sloan became CFO in February 2011 when he took over from Howard Atkins. Sloan had been chief administrative officer, and an executive in the wholesale-banking unit before that.
Wells Fargo has moved other senior executives around to give them more experience in different parts of the firm. The bank announced in 2011 that Avid Modjtabai would run the consumer-lending group after overseeing operations and technology, and Kevin Rhein became chief information officer after leading the card and consumer-lending units.
Shrewsberry becomes CFO after running the Wells Fargo Securities investment bank. The firm has climbed the ranks of securities firms while disclaiming any desire to be No. 1, saying it’s motivated by customer needs. The expansion has pushed into niches dominated by JPMorgan Chase & Co. and Goldman Sachs Group Inc., both based in New York.
In wholesale banking, Wells Fargo is the largest lender for commercial real estate and to mid-size companies, Sloan said in a Feb. 12 presentation. The business includes an asset-management unit overseeing $487 billion, up 8 percent from a year earlier, he said.
“I would assume there are several executives they are thinking about for CEO-type roles,” Moshe Orenbuch, an analyst at Credit Suisse Group AG, said in an interview. Yesterday’s announcement should be viewed as “thinking about successors.”
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