Wells Fargo CEO Stumpf steps down after fake accounts scandal

Wells Fargo CEO John Stumpf testifies before the House Financial Services Committee on Sept 29, 2016.
Wells Fargo CEO John Stumpf testifies before the House Financial Services Committee on Sept 29, 2016.PHOTO: NYTIMES

NEW YORK (AFP) - Embattled Wells Fargo chairman and CEO John Stumpf has retired with immediate effect following a sham accounts scandal, the San Francisco bank announced on Wednesday.

Mr Stumpf's departure from the US commercial and retail banking giant caps mounting public outrage after the bank admitted last month that employees had opened millions of deposit and credit card accounts without customers' knowledge in order to meet sales quotas.

As the scandal grew, lawmakers in Washington called for Mr Stumpf's resignation, repeatedly castigating him in public hearings for stealing from customers and pressuring low-level employees to meet unrealistic sales targets, all while touting the results to investors.

"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," Mr Stumpf said in a statement.

The bank last month settled with US regulators and the City of Los Angeles for about US$190 million (S$262.9 million) in fines and restitution, a sum that did not reflect the magnitude of the scandal's effect on the bank, which has seen several state governments suspend ties with it.

Wells Fargo announced last month that Mr Stumpf, who joined Wells Fargo in 1982, would forfeit US$41 million in compensation and receive no bonus for the year.

The bank told AFP on Wednesday that Mr Stumpf would not receive any severance payment with his retirement.

Prior to the scandal, Wells Fargo had been the world's largest bank by market value but shares in the company have fallen more than 9 per cent following the September settlement, closing on Wednesday at US$45.32 in New York.

Mr Stumpf will be succeeded by president and chief operating officer Tim Sloan, the bank said in the statement.