Latest leadership shuffle shows Wells Fargo is in new phase

• Key insight: Wells Fargo is replacing its chief risk officer, who is retiring. The role will be filled by the man who's served as chief operating officer for the last seven years.
• What's at stake: The changes underscore that the bank has entered a new era, where the focus is no longer on replacing executives who were tarnished by a series of scandals.
• Forward look: Wells Fargo plans to announce its next chief operating officer in the near future.

Wells Fargo CEO Charlie Scharf has another opportunity to put his stamp on the company's top executive ranks after its long-tenured chief risk officer announced plans to retire.

Under a plan announced Wednesday, Chief Operating Officer Scott Powell will move into the chief risk officer role, which will be vacated by Derek Flowers. That shuffle, scheduled for January 2027, will leave room for a new chief operating officer. Wells plans to name that person in the near future.

The changes underscore that the megabank has entered a new phase, where the CEO's focus is no longer on replacing executives who had filled key roles during damaging scandals.

Scharf arrived at the megabank in late 2019, as it was managing the fallout from scandals that led to the ouster of the two previous CEOs.

He has since installed a senior leadership team that features several of Scharf's former colleagues from his earlier stints at the Bank of New York Mellon and JPMorganChase.

Following the retirement of Flowers, who joined Wells Fargo in 1995, only two of 13 executives on the bank's operating committee will have been with the company longer than Scharf.

Flowers was one of a relatively small number of Wells Fargo veterans who got promotions to senior roles after Scharf's arrival. Fortune reported last year that Flowers caught Scharf's eye for doing strong work as a credit risk manager.

"The best executives at Wells were not at the top but the mid and upper-mid level, and we promoted many of them, including Derek," Scharf told Fortune. "And that builds confidence with the troops, because they know who the good people are."

Flowers, 54 years old as of February, is nine years younger than Powell, who will succeed him. The two men have been working together for years, filling roles with overlapping responsibilities. Powell was hired by Scharf in 2019 to a position whose duties included overseeing regulatory relations and regulatory execution.

When Flowers was elevated to the chief risk officer job in 2022, the San Francisco-based bank was still operating under an asset cap the Federal Reserve had put in place in 2018. Those regulatory handcuffs were finally unlocked last year.

"Derek played a pivotal role in strengthening our risk and control framework and fostering the strong risk culture that positions Wells Fargo for continued growth," Scharf said in a press release Wednesday. "Working closely with Scott, he helped advance a significant transformation of the company's risk and control capabilities, leaving a lasting mark on our company and the industry."

A Wells Fargo spokesperson declined to answer questions about the bank's upcoming announcement of a new chief operating officer.

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Powell, who's based in New York, is a former CEO of Santander Holdings USA. Earlier in his career, he worked with Scharf at JPMorgan.

For four consecutive years, Wells Fargo listed Powell as one of its five or six "named executive officers," whose compensation gets disclosed publicly.

Between 2020 and 2023, Powell collected between $9.3 million and $14.6 million in total annual compensation, regulatory filings show. Powell was not listed as a named executive officer in either of the bank's two most recent annual disclosures.