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Some analysts see Scharf leading Wells Fargo out of regulatory purgatory

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Some analysts see Scharf leading Wells Fargo out of regulatory purgatory

Several analysts were upbeat about Wells Fargo & Co.'s choice of Charles Scharf as the bank's next CEO, with some predicting that the experienced banker can navigate the troubled giant out of its regulatory restrictions.

SNL Image

After a lengthy search,
Wells Fargo named Charles Scharf CEO.

Source: AP Photo

Dick Bove at Odeon Capital Group struck an enthusiastic note on the news. He wrote that Scharf "appears to be the perfect person for this job," pointing to a lengthy background in financial services dating back to his time at Commercial Credit, a consumer finance company, where he worked with Jamie Dimon before moving with Dimon to Bank One.

In addition to the Bank of New York Mellon Corp. top job, Scharf was CEO of Visa Inc., CFO of Citigroup Inc.'s global corporate and investment banking division, and CFO of Salomon Smith Barney. Bove wrote that Scharf's job-hopping should be viewed as a positive.

"Mr. Scharf's history shows that he loves taking on major challenges and rebuilding businesses. Once that is accomplished, he appears to get bored, leaves and seeks out a new challenge," he wrote.

David George at Baird Equity Research was generally positive on the hire. He wrote that Scharf's appointment provided "more confidence the company will be able to move quickly and remediate lingering regulatory issues, improve expense leverage, and reignite growth for the company." George also wrote that Scharf's extensive financial services background suggested there was little chance the banking giant would pursue a large strategic shift.

Fitch Ratings also put out a rapid reaction note on the news. Christopher Wolfe, a managing director for the rating agency, wrote that the hire was "a positive development given [Scharf's] track record." Wolfe noted that an inability to exit the regulatory asset cap in a timely fashion might negatively impact the bank's ratings.

Brian Kleinhanzl at Keefe Bruyette & Woods struck a more skeptical tone. While he wrote that resolving the CEO uncertainty was a "net positive," he appeared unconvinced that Scharf was a home-run hire.

"Longer term we are taking a wait and see approach as Scharf's legacy at BNY Mellon was incomplete and his relatively short tenure there makes us cautious about how long he will stay at WFC," Kleinhanzl wrote.