UPDATE 4-Wells Fargo taps BNY Mellon's Charles Scharf as CEO

Imani Moise

(Adds analyst comment)

Sept 27 (Reuters) - Wells Fargo & Co on Friday named banking veteran Charles Scharf its next chief executive officer effective next month, ending a six-month search.

Scarf, who joins the fourth-largest U.S. bank after a 2-year stint leading Bank of New York Mellon, will become Wells Fargo's third CEO in as many years. Former CEOs Tim Sloan and John Stumpf resigned amid sales practices scandals that have plagued the bank since 2016.

Scharf is taking over a bank that is still operating under a regulatory microscope, trying to rebuild its reputation with customers, investors and politicians.

Still, he struck an upbeat tone on a call with analysts following his appointment.

I dont come in with a preconceived notion that there has got to be some kind of dramatic change," Scharf said. "The first priority is to make sure we get the regulatory issues behind us to help create the foundation that we need to continue to build the company."

Scharf is a hard-working leader who focuses on making operations more efficient rather than a charismatic visionary, said a source familiar with his leadership style.

Although Scharf, 54, said he had imagined that BNY would be his last job, he has always had aspirations to be a big bank CEO, the source said.

Prior to joining the custodian bank, Scharf held the top job at Visa Inc, the world's largest payment network. He started his career in 1987 at Commercial Credit Corp, a consumer finance company run by Jamie Dimon and Sandy Weill - executives who went on to lead two of America's biggest banks.


Wall Street analysts cheered the conclusion of a search that has dragged on for 6 months, and applauded the board's pick of a banking veteran who has experience leading a diverse array of businesses.

Uncertainty about management has been cited as a top concern for analysts since Sloan's departure in March. Wells Fargo's stock edged up 1% during that period while the KBW Bank Index rallied 7%.

However, bank analysts said clearing regulatory hurdles will still be a tough task, as Wells Fargo is currently operating under more than a dozen regulatory consent orders.

"The appointment of Mr. Scharf removes a major overhang," Saul Martinez of UBS wrote in a note to clients. Still, he added, "we think getting past the heavy lift of the consent order is necessary for Wells to be able to reduce its cost base."

KBW analyst Brian Kleinhanzl said he was unsure what to expect from Scharf as Wells' CEO since his tenure at Bank of New York Mellon lasted only for two years.

"Scharf's first task will be appeasing regulators and making the changes necessary to remove the asset cap currently in place," Kleinhanzl said.

"He moves from a bank with far less retail business than Wells Fargo, so he will face a steep learning curve," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

Separately, BNY Mellon named finance head Thomas Gibbons as its CEO on an interim basis. The bank also said Scharf had forfeited all of his equity and incentive awards, which were unvested as of Thursday.

Wells Fargo's board had considered keeping its interim CEO, Allen Parker, on a permanent basis even after saying it would seek an outsider to fill the role, sources had told Reuters in June. Parker will stay with the company to help the transition and as general counsel

Wells said Scharf's base salary at the bank would be $2.5 million - nearly the same as Sloan's base pay in 2018.

Regulatory filings showed that Scharf's total compensation for 2018 at BNY was $9.4 million. Sloan's total compensation for the year was $18.4 million.

Shares of Wells Fargo were up nearly 4.% at $50.83 in late-morning trading. (Reporting by Imani Moise; Editing by Anil D'Silva and Dan Grebler)