The appointment of Charlie Scharf as the new CEO of Wells Fargo marks a crucial step in the bank's long journey to restore confidence in its tarnished image, an executive at consulting firm Capgemini told Banking Dive.
"It gives a lot of people confidence," said Sankar Krishnan, Capgemini's executive vice president of banking and capital markets. "I think it also gives regulators a lot of confidence, the stockholders, as well as other banks."
The nation's fourth-largest bank completed a six-month search, naming the Bank of New York Mellon CEO its new chief executive Friday.
Scharf's official first day on the job will be Oct. 21. He replaces interim CEO C. Allen Parker, who will return to his position as the bank's general counsel.
The bank has lacked consumer confidence and trust in recent years, as it dealt with the repercussions of a series of high-profile scandals. It made headlines in 2016, when it was revealed that Wells Fargo employees opened millions of fraudulent accounts to receive sales-based incentives.
Questionable practices in the bank's auto insurance, mortgage and wealth management divisions continued to generate bad press in subsequent months.
And an August report by The New York Times revealed that a policy allowed Wells Fargo accounts to remain open even after customers thought they had closed them, resulting in some customers being charged thousands of dollars in overdraft fees.
The bank is also operating under growth restrictions set by the Federal Reserve and is not allowed to hold total assets above the $1.93 trillion it had at the end of 2017, a cap that remains in place through at least the end of this year.
Sigh of relief
Despite the competitive nature of the financial services industry, Krishnan said even Wells Fargo's biggest rivals will welcome the end of its executive search.
"[Wells Fargo] has grown over the last few years, not only on the wealth management side, but also on retail and also in mortgages. So I think it is a big sigh of relief that the position is closed out. And it's a big sigh of relief that it is someone that the regulators know from before," Krishnan said.
The bank's shares rose nearly 4% following Friday's announcement, an indicator that Wall Street is confident in Wells Fargo's choice of leadership.
The Office of the Comptroller of the Currency, Wells Fargo's primary regulator, approved the appointment, The Wall Street Journal reported.
The right skill set
Scharf brings a wealth of experience in both retail and corporate banking, Krishnan said.
"You don't find these people very easily," he said. "It's a very good mix of commercial credit, retail credit, retail banking and corporate banking and security. And Bank of New York has been very well run from a regulatory perspective. So I think all those skills will come in very handy."
Scharf also has experience in corporate turnaround, as demonstrated during his time at BNY Mellon, where he was tasked with overhauling the custodial bank.
Scharf cut expenses, overhauled meetings and made leadership changes during his two-year tenure at the bank, according to Reuters.
However, Scharf did not set concrete targets for BNY Mellon's revamp, and revenue growth has been muted, The Wall Street Journal reported.
As Scharf heads into his next venture, he has already garnered praise from a former colleague, Jamie Dimon, JPMorgan Chase's CEO.
"Charlie is an excellent choice," Dimon said in a statement to CNBC. "He has great experience and high character. He is a first class leader."
Scharf's professional relationship with Dimon spans 25 years, beginning when they worked together at Citigroup.
After Dimon was pushed out of Citigroup, Scharf left his position as that bank's CFO to follow Dimon to Bank One in Chicago.
Scharf continued to work under Dimon after JPMorgan purchased Bank One in 2004. Scharf left the bank in 2012 to become CEO of Visa.
Scharf will operate San Francisco-based Wells Fargo from New York City, a move Krishnan said could resonate with stakeholders.
"A lot of the stakeholders and businesses are [in New York]," he said. "There are a lot of things to be done with the regulators and with the stock exchanges. So I think it's a very good mix as far as I can see. … It also shows his commitment to the bank and to his family in terms of being able to manage both. In time, he may relocate."
Choosing Scharf solves at least one problem that has plagued Wells Fargo for the past few years, Krishnan said.
"One of their problems has been the identification of someone that has the personality and the gravitas to show everybody in the entire ecosystem that he has done it before and can bring in a new order of confidence," he said. "And I think [Scharf] is just what the doctor ordered in that sense."