Dive Brief:
- Wells Fargo's relationship with the National Rifle Association (NRA) is "declining," CEO Charlie Scharf told investors Tuesday at the bank's annual shareholder meeting, according to Reuters. "I don’t think we participate any longer in the organization’s line of credit and mortgage loan commitments," he said.
- Shareholders at the meeting rejected a proposal that would have required the bank to disclose its median pay gap for women and nonwhite employees worldwide. Wells said its female employees in the U.S. earn more than 99% of what men in similar jobs receive, but activists want the bank to post raw gender pay gap data, as Citi does. By that measure, for Citi, the gap is 27%.
- The meeting comes a day after Wells Fargo announced it had hired another of Scharf's former colleagues. Lester Owens, who, in July, will become the bank’s head of operations, served as global head of operations at Bank of New York Mellon. Scharf left the top role at BNY Mellon in October to become Wells Fargo's CEO.
Dive Insight:
Wells Fargo has been quietly winding down its ties to the firearm lobbying group for nearly two years, a bank spokesman told Reuters. Scharf assured shareholders the bank's exposure to the NRA was minimal.
Nonetheless, it marked a shift in tone for the nation's fourth-largest bank, which arranged $431 million in debt for gunmakers between 2012 — around the time of the Sandy Hook school shooting — and 2018, according to Bloomberg data. Later in 2018, Wells issued a $40 million line of credit to gun manufacturer Sturm Ruger, its financial filings showed.
By contrast, that year Citi said it would require its retail-sector clients to sell firearms only to customers who have passed a background check, restrict firearm sales for buyers under 21, and not sell high-capacity magazines. Bank of America, meanwhile, announced it would stop lending money to gun manufacturers that make military-inspired firearms for civilian use. The moves came in response to the Stoneman Douglas school shooting that killed 17 people in Parkland, Florida, in 2018.
More recently, former Rep. Beto O’Rourke, D-TX, during his campaign for president last year, circulated a petition urging banks and credit card companies to curb their financing of firearm sales.
And last year, Wells was one of six large or regional banks to be given an "F" last year from gun control advocates Guns Down America for its firearm financing (along with BB&T, JPMorgan Chase, TD, PNC and U.S. Bank).
Banks, however, are taking more stock in their social stances — and finding responsible lending is good business. The global responsible loans market totaled $111.5 billion in July 2019, a 40% increase from a year earlier, according to S&P Global Ratings.
Goldman Sachs in December announced an initiative to commit $750 billion in loans, underwriting, advisory services and investments over the next 10 years toward companies and projects focused on renewable energy, sustainable transportation, affordable education.
In the past several weeks, Barclays pledged to reduce the carbon emissions it creates or funds to net zero by 2050. And Citi vowed to stop providing financial services to thermal coal-mining companies by 2030.
Wells Fargo was among several banks to say last year that it would stop financing operators of private prisons amid the immigrant detention crisis along the U.S.'s southern border.
The San Francisco-based bank's continued relationship with the NRA after 2018 caused it to lose its mortgage partnership with the American Federation of Teachers, Reuters reported.
At the shareholder meeting Tuesday, Scharf said the bank would "have a different level of management discipline than we've had in the past."
"We will judge ourselves based upon our outcomes, not our words," he said, according to American Banker.
A new member of that management, Owens, would be one of several former colleagues of Scharf's to be brought aboard since the CEO began his tenure six months ago. Wells' chief operating officer, Scott Powell, joined the bank in December from Santander but worked with Scharf at Bank One and JPMorgan Chase.
Owens, who will report to Powell, will lead a team to build "a more unified, more integrated approach to Wells Fargo’s business operations functions," the bank said in a press release Monday. Owens worked for more than 11 years at JPMorgan Chase, about nine years at Deutsche Bank and roughly eight months under Scharf at BNY Mellon.
