General Counsel C. Allen Parker will serve as interim CEO and an external search is being conducted to find a replacement for Sloan.
Amid reports that Wells Fargo held initial discussions with former Goldman Sachs executive Harvey Schwartz to serve as the next CEO, board chairwoman Betsy Duke on Thursday told investors the company has "not spoken to anyone outside of Wells Fargo" as part of the search for a new top executive.
The search committee will meet for the first time on Friday, Duke said.
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Wells Fargo has faced congressional pressure to overhaul its leadership after a string of continued scandals during Sloan's tenure, many which began under former CEO John Stumpf.
"It has become apparent to me that our ability to successfully move Wells Fargo forward from here will benefit from a new CEO and fresh perspectives," Sloan said in a statement. "We have made progress in many areas and, while there remains more work to be done, I am confident in our leadership team and optimistic about the future of Wells Fargo."
The news could come as a surprise to Warren Buffett, Wells Fargo's biggest shareholder, who earlier in the day told CNBC he "100 percent" supported Sloan as CEO.
During a hearing in the House Financial Services Committee earlier this month, Sloan tried to assuage concerns from lawmakers that he was not acting quickly enough to address the lender's long list of scandals.
“With all of this experience and the length of time that you have been there, the roles that you have played, you have not been able to keep Wells Fargo out of trouble, you keep getting fined,” panel Chairwoman Maxine Waters, D-Calif., said. “Why should Wells Fargo continue to be the size that it is?”
The San Francisco-based company is currently operating under 14 consent decrees from federal regulators, Sloan said.
It has paid billions in recent months to settle a slew of lawsuits, including one from 50 states and the District of Columbia over phony accounts. Wells Fargo also paid nearly $2.1 billion to settle claims from the Justice Department that it misled customers on the quality of its mortgage loans, and $1 billion over allegations it sold unneccessary auto insurance.
The company also previoulsy announced it would cut 26,500 jobs over the next three years.
The Office of the Comptroller was reportedly weighing whether to force out top executives.
Democratic Sen. Elizabeth Warren of Massachusetts, one of the Wells Fargo's most vocal critics in Congress, previoulsy called on Sloan to retire.
"Given Mr. Sloan's track record, the Board of Directors cannot comply with the Federal Reserve's requirements for removing the growth cap if it permits Mr. Sloan to continue running the company," she said in a letter last year.
In a post on Twitter on Thursday, Warren said it was "about damn time" for Sloan to depart.
"He enabled Wells Fargo's massive fake accounts scam, got rich off it, & then helped cover it up. Now—let's make sure all the people hurt by Wells Fargo's scams get the relief they're owed," the 2020 Democratic presidential candidate wrote in the post.