Dive Brief:

• Wells Fargo plans to split its three business units into five, a move CEO Charlie Scharf said will provide more accountability across the bank, it announced Tuesday.

• The San Francisco-based bank said it will split its wholesale bank into a commercial unit and an investment bank that focuses on capital markets. The bank is also dividing its consumer bank into two arms. One unit will focus on branches and small businesses, and another will focus on consumer lending.

• The changes "are designed to create a flatter line of business organizational structure and provide leaders with clear authority, accountability, and responsibility," the bank said.

Dive Insight:

The restructuring marks Wells Fargo's first overhaul under Scharf, who has served as the bank's top executive since October.

Scharf has prioritized regaining regulatory trust and repairing the bank’s damaged image. The bank has 12 public enforcement actions that require a significant commitment of resources, he told analysts last month, according to American Banker​.

The San Francisco-based bank has been under scrutiny from lawmakers and regulators since 2016, when Wells Fargo employees were found to have created roughly 3.5 million fake accounts to receive sales-based incentives.

Regulators and the bank’s board have said the company’s decentralized structure was among the chief causes of the 2016 scandal, according to The Wall Street Journal.

The bank’s own board concluded in 2017 that its consumer banking unit fostered an aggressive culture that pushed employees to open fake accounts to hit their sales goals, the Journal reported.

"These changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work," Scharf said in a statement. "I am confident that this organizational model and our strengthened risk and control foundation will bring greater focus and accountability to the company."

Under the new structure, Mary Mack, who most recently led the bank’s consumer banking unit, becomes CEO of consumer and small-business banking, responsible for branch banking and small business.

Perry Pelos, who most recently led wholesale banking, will transition to a new role as CEO of commercial banking. 

Jon Weiss, who most recently led Wells Fargo’s wealth and investment management arm, will transition to a new role as CEO of corporate and investment banking, while Mike Weinbach, who most recently served as the CEO of Chase Home Lending at JPMorgan Chase, will join the bank in early May as CEO of consumer lending.

Weinbach is just the latest transplant from JPMorgan, where Scharf once served as chief of staff to CEO Jamie Dimon. Scharf in December hired JPMorgan alum Scott Powell to serve as chief operating officer. Wells Fargo also announced last week it had hired Michael Cleary, another former JPMorgan executive, to lead sales practice oversight and management.​

Wells Fargo said it is conducting a search for a new CEO of its wealth and investment management unit, and Weiss will serve in the role on an interim basis.