Wells Fargo & Co.'s Chief Risk Officer Mike Loughlin is retiring as the bank continues to face heightened regulatory scrutiny, especially over its risk- management practices.
The San Francisco-based bank said Wednesday it will name a successor to Mr. Loughlin in "the next few months," and he will remain in his role through the transition.
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The Wall Street Journal reported earlier in January that banking regulators downgraded one part of a secret assessment of banks' health and strength that focuses on Wells Fargo's management and its ability to manage risk.
The downgrade of the assessment, known as a CAMELS score, occurred over the summer of 2017, as Wells Fargo continued to grapple with issues related to how it treats customers. In September 2016, the bank settled allegations that it had years of improper sales practices that resulted in potentially 3.5 million accounts being opened without customers' knowledge.
Elsewhere in the bank, more than 550,000 auto-loan and mortgage customers were potentially overcharged for products for years as well. Regulators' most recent concerns focus on the bank's overall approach to catching and preventing problems that can harm customers, a major part of risk management.
The Office of the Comptroller of the Currency has been weighing a new enforcement action against the bank related to such risk controls, The Wall Street Journal reported earlier in January.
A Wells Fargo spokeswoman at the time declined to comment on the bank's CAMELS rating or any potential OCC actions. The spokeswoman then said the bank is "very focused on prudent and effective risk management" and continues to enhance those matters.
Mr. Loughlin, 62 years old, has been with the bank or its predecessors for 36 years and has served as chief risk officer since 2008, a period in which the biggest risk that bank officials worried about was a repeat of the lax lending practices that led to the housing crisis.
Mr. Loughlin reports directly to Wells Fargo Chief Executive Timothy Sloan and has served on the bank's operating committee of its top executives. Mr. Sloan said in a statement that Mr. Loughlin has served during "some of the most critical times in our company's history," including the financial crisis and the bank's acquisition of Wachovia Corp.
Since then, Mr. Loughlin has overseen risk matters related to credit, markets, operations, compliance and cybersecurity, according to the bank.
Over the last two years, Mr. Loughlin also led a plan to centralize many of the company's risk functions. Specifically, the bank shifted about 5,200 risk employees to different roles in an effort to give them more independent oversight outside the business lines, according to an April report done for the bank's board.
But Wells Fargo didn't always specify the employees' new roles and responsibilities, current and former executives said. Regulators noticed the problems, and Mr. Loughlin had to submit a new risk framework to them in the first half of 2017, these executives said.
Around the spring of 2017, Wells Fargo tapped consultancy Promontory Financial Group to help with the issues, bringing in former top OCC official and Promontory managing director Julie Williams, people familiar with the hiring said. Promontory's changes, which have been rolling out in recent weeks, in many cases reversed work Wells Fargo had done in the past 12 to 18 months, they added.
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(END) Dow Jones Newswires
January 17, 2018 15:25 ET (20:25 GMT)
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