Wells Fargo announced late Wednesday its chairman and CEO John Stumpf will leave the company, retiring effective immediately.
The news comes after the company found itself in hot water in the wake of a customer-accounts scandal that came to light last month.
“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside.
I know no better individual to lead this company forward than Tim Sloan,” Stumpf said in a statement.
Wells Fargo said its board of directors elected Sloan, the company’s president and chief operating officer, to succeed Stumpf as CEO while its lead director Stephen Sanger will serve as non-executive chairman. Sloan will also retain his title as president.
Sanger commended Stumpf for his 34 years of work at the company leading the banking giant through the worst financial crisis since the Great Depression, and for building, what he called, the strongest and most well-known financial services company in the world.
Meanwhile, Sloan acknowledged the “tremendous responsibility” of taking the reigns as CEO of Wells Fargo and vowed to clear the bank’s tarnished reputation.
“My immediate and highest priority is to restore trust in Wells Fargo,” he said. “We will work tirelessly to build a stronger and better Wells Fargo for generations to come.”
In September, the company was caught having opened about 1.5 million phony bank and credit-card accounts without customer consent, dating all the way back to 2011.
Customers often were unaware of the fraudulent accounts created in their name until they were charged unexpected fees, or received credit or debit cards in the mail they didn’t request.
In the wake of the scandal, federal regulators fined the bank $185 million and the company fired more than 5,000 employees, including managers, it held responsible for the situation.
Stumpf, who forfeited $41 million in pay related to the scandal, also appeared on Capitol Hill twice to testify about the policies and sales culture and incentives at Wells Fargo, one many former employees have said was too harsh and forced them to engage in illegal practices.
Stumpf’s decision to leave Wells Fargo comes just two days after he lead an hour-long strategy call with 500 top executives at the bank to discuss how to move forward from the scandal that’s dominated the headlines.
A portion of the call was also dedicated to Stumpf’s slide presentation to investors following the bank’s release of its third-quarter earnings results due out on Friday morning.
Since news of the scandal broke last month, Wells Fargo’s stock price has plunged more than 9%. On the heels of Stumpf’s departure from the company, shares rose as much as 1.8% in after-hours trade.