Few chief executives have gotten off to a rockier start than Tim Sloan. He took over Wells Fargo as it was reeling from its 2016 fake-accounts scandal, then put in a poor showing before Congress and presided over lackluster results. Behind the scenes, though, he’s been laying the basis for a comeback.

Sloan launched a campaign to root out dodgy behavior – “going house to house looking for problems to solve,” one executive described it to Breakingviews. It is already yielding results. The number of potentially fake bank and credit-card accounts has risen to 3.5 million from 2.1 million after the CEO expanded the search. And the company fired four forex bankers after discovering their role in overcharging some clients, rather than waiting for regulators to intervene. Such moves are crucial for Sloan to prove he’s cleaning ship.

He’s also trying to overhaul the culture that lies at the root of the bank’s woes. Problems in auto insurance and mortgage sales, for example, recently prompted the Office of the Comptroller of the Currency to threaten enforcement action if the bank doesn’t buck up quickly.

The cultural mess runs deep. The focus on cross-selling products, and the powerful fiefdoms it helped spawn, dates back to the bank’s 1998 takeover by Norwest. Sloan is trying to replace that sales-first orientation instilled by then-boss Dick Kovacevich with an enterprise mission of helping customers succeed financially.

That’s easy to say, but hard to do – and even harder to measure. So he’s holding a series of town halls and branch visits with staff. In addition, he has centralized risk, compliance and human-resources functions and created an office to oversee staff conduct, ethics and complaints. And he has brought in outside consultants to assess where the bank’s culture is still deficient.

It will take time to convince the OCC that the bank is fixing its faults. Investors meanwhile are waiting to see if Sloan can revive growth in retail revenue and deliver a promised $4 billion in cost cuts. The stock’s 5 percent gain over the 12 months to Dec. 1 trails the KBW Banks index by 13 percentage points.

Sloan has a lot of ground to make up, and six directors and a fresh chairman to keep him on his toes. But he is trying to put the bank on a path to a brighter future rather than just fighting the ghosts of the past.

On Twitter https://twitter.com/AntonyMCurrie

CONTEXT NEWS

- The Office of the Comptroller of the Currency has told Wells Fargo that it is considering instigating a formal enforcement action against the bank following problems in its auto-insurance and mortgage businesses, the Wall Street Journal reported on Nov. 29. In a letter to the bank dated Nov. 4, seen by the newspaper, the regulator said Wells Fargo had willingly harmed customers and repeatedly failed to correct problems in those two businesses and elsewhere. Reuters first reported that the OCC was pondering sanctioning the bank on Oct. 2.

- Also on Nov. 29, Wells Fargo appointed three new independent directors who will join the board at the start of January.

- Celeste Clark is the former chief sustainability officer and global public-policy and external-relations officer for Kellogg. Theodore Craver is the former chairman, chief executive and president of Edison International, and an erstwhile treasurer of First Interstate Bancorp, which Wells Fargo bought in 1996. And Maria Morris ran technology and operations for MetLife, where she was most recently interim head of the U.S. business and head of the global employee-benefits business.

- The three will replace departing Chairman Stephen Sanger as well as Cynthia Milligan and Susan Swenson, who are all retiring at the end of 2017. Sanger and Milligan received less than 60 percent of the vote from shareholders at the bank’s annual meeting in April 2017.

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(Editing by Tom Buerkle and Martin Langfield)

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