Sloanwas promoted to the top job in October 2016, when John Stumpfstepped down amid intense blowback over the revelation thatemployees had opened millions of fake accounts to meet sales goals.(Photo: Bloomberg)

(Bloomberg) –Wells Fargo & Co. Chief Executive Officer TimSloan gave in to critics and abruptly stepped down, after the31-year company veteran struggled to tame a range of scandals, launching the fourth-largest U.S.bank into a hasty search for a successor.

Sloan, 58, will be replaced on an interim basis by the generalcounsel of Wells Fargo, C. Allen Parker. The board said itplans to look externally for a permanent replacement. The stockclimbed in early trading Friday.

Ever since Sloan took the helm in 2016, he's faced calls for hisouster from critics including Senator Elizabeth Warren, a Democratrunning for president. They said a longtime insider couldn't becounted on to clean up scandals emerging from the lender's vastbranch network and other divisions.

Just last week, the board reiterated its support for Sloan. Andhours before Thursday's news, top shareholder Warren Buffett saidhe backed him “100 percent.”

“They clearly have to regain their credibility,” said John Reed,who ran Citigroup Inc. until 2000. “You have to somehow behave in away that causes the world to say, 'OK, the past is behind them andthey're moving forward.' And that's a leadership issue. The factthat you would turn to a lawyer for something like that is notstrange.”

Shares of Wells Fargo rose 2.2 percent to $50.19 as of 7 a.m. inNew York. They climbed 6.5 percent this year through Thursday.

Ending 'distraction'

On a conference call after the announcement, Sloan said hedecided to leave because his presence was hurting the company. “Ithas become apparent that the focus on me has become a distractionthat impacts our ability to successfully move Wells Fargo forward,”he said.

He notified the board Tuesday, according to a regulatory filing.Chair Betsy Duke said the panel hasn't yet spoken to anycandidates.

The search for a successor won't be simple. Recruiters andinvestors have said the pool of plausible replacements is shallowand the job description daunting, especially with the company stillembroiled in probes.

Finding an external candidate groomed to run such a large bankprobably means poaching from just a few peers, such as JPMorganChase & Co. Yet paying enough to pry someone from a more stablesituation risks a firestorm with the same critics who called forSloan's head.

In the meantime, Parker, 64, will be an unusual bank boss. Hewas a longtime lawyer for Cravath, Swaine & Moore LLP, one ofWall Street's preeminent law firms, where he started in 1984 andwas presiding partner before joining Wells Fargo in 2017. He wasamong more than 10 senior hires from outside the company as itsought to clean up its image.

Bank of America Corp. was embroiled in legal fights almost adecade ago when it installed its former general counsel, BrianMoynihan, as CEO. He had also run the bank's consumer andinvestment-banking businesses and remains at the helm.

“Putting Parker in place, albeit on a temporary basis, makessense,” said veteran bank analyst Charles Peabody. “The pressureswere such that it was inevitable.”

The 'Re-Established' campaign

Sloan was promoted to the top job in October 2016, when JohnStumpf stepped down amid intense blowback over the revelation thatemployees had opened millions of fake accounts to meet salesgoals.

Sloan overhauled the incentive system, traveled the country tomeet staff and ousted managers. He aired commercials to apologizeand launched a campaign, dubbed “Re-Established,” laying out thebank's commitment to doing the right thing.

Yet he struggled to make headway in improving the company'sreputation as additional problems emerged in other divisions, andas politicians, regulators and investors intensified theircritiques.

Last year, Wells Fargo was dealt an unprecedented blow from theFederal Reserve as then-Chair Janet Yellen's final act: The bankcan't increase assets beyond their level at the end of 2017 untilit addresses missteps to the regulator's satisfaction.

In January, the lender said it's planning to operate under thecap through the end of 2019, rather than just the first half. Inthe meantime, it's accruing billions of dollars in fines andsettlement costs. That includes $1 billion last year to federalregulators for consumer mistreatment and $575 million to 50 statesand the District of Columbia.

Buffett's sympathy

Supporters including board members credited Sloan for unearthingand fixing past problems, tightening internal oversight and takingother steps to address regulators' concerns and improveearnings.

“I'm very empathetic to anybody that walks into a big problem ata very, very, very large and politically sensitive institutionwhere you've got maybe 250 or so thousand people and the bad actsof one of them can reflect on you,” Buffett said Thursday in awide-ranging interview with CNBC from a benefit luncheon inTexas.

Sloan repeatedly traveled to Capitol Hill to give lawmakersupdates on his progress and face tough questions. At one point,Warren summed up their concerns: “His hands are too dirty fromoverseeing years of scams and scandals.”

That pressure kept mounting. At his most recent appearancebefore the House Financial Services Committee this month, thepanel's chair, Democrat Maxine Waters, said he should be denied abonus and fired. Then, as the session concluded, the Office of theComptroller of the Currency issued an unusual statement, saying itcontinues to be disappointed with the bank. Fed Chair Jerome Powellalso made a similar point this month, saying the company had “deepproblems” and that the central bank wasn't yet satisfied withefforts to address them.

'About damn time'

“About damn time,” Warren wrote on Twitter. “He enabled WellsFargo's massive fake accounts scam, got rich off it, & thenhelped cover it up. Now — let's make sure all the people hurt byWells Fargo's scams get the relief they're owed.”

Analysts and investors will have to get to know Parker, who'smaintained a relatively low public profile while at the bank. He'smarried with four children, likes golf, and wrote a master's thesison religious minorities in Pakistan, according to an interviewposted on the bank's website in 2017.

“The idea of taking on a new challenge in my career fascinatedme,” he said then. “I knew I'd have the opportunity to help thecompany become a better organization and navigate the legal andregulatory issues surrounding the sales practices issues.”

'Fall guy'

In contrast, Sloan was well-known when he took the helm. He roserapidly through the executive ranks after Stumpf became CEO in2007, becoming chief administrative officer in 2010 and chieffinancial officer just five months later. By 2015, he was presidentand chief operating officer.

He's eligible to collect the remainder of past compensationpackages but won't receive a special retirement award, the banksaid in its filing.

“Tim Sloan may be a fall guy here, but they're doing the rightthing,” said Tony Scherrer, director of research at Smead CapitalManagement, which owns 1.26 million Wells Fargo shares. “Maybe it'sjust a gesture” to assuage criticism, he said. But “it resets thebar. It shows that they're not going to let it just fester.”

Copyright 2019 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.