Wells Fargo CEO Scharf sees a speedy restoration within the U.S. financial system in 2021 as vaccines roll out

Charles Sharp

Qilai Shen | Bloomberg | Getty Images

Wells Fargo CEO Charlie Scharf said Tuesday that the US economy is likely to recover quickly from the coronavirus over the next year after vaccines are widely used.

As the head of the fourth largest US bank by assets, Scharf has a unique insight into the saving and spending activities of millions of Americans. The government’s actions at the start of the pandemic are “extremely effective” in propping up households and businesses, he said at a Goldman Sachs virtual banking conference.

Now that effective vaccines are coming, Scharf is “far more confident” that the economy will recover from the current troubled period as Covid-19 cases hit record highs.

“The world we are experiencing today is certainly far better economically than we thought it could have been sitting here three or six months ago,” said Scharf. “It is entirely possible that, given the pent-up demand, the vaccines will recover very quickly once the vaccines are introduced.”

American banks have raised tens of billions of dollars in credit loss reserves related to the pandemic this year, though most of those reserves have not yet been needed, largely thanks to the $ 2.2 trillion CARES Act. Now lawmakers are negotiating the outline of a smaller relief bill to help the unemployed and small businesses survive until life returns to normal next year.

“The state economic stimulus programs should be a bridge; the bridge is over,” said Scharf. “We are sitting here today and we certainly believe that an incentive is necessary as another bridge, but an end is in sight.”

Scharf was named CEO in October 2019 after the bank’s two former executives failed to meet regulators’ demands for improved controls following the lender’s fake accounts scandal. He is still in the middle of an internal review that will likely result in the bank selling what Scharf does not consider to be part of its core business.

“Don’t expect dramatic operations in terms of the company, but there are some smaller product groups that we have across the company. They are not the core of our work, they are not very important to the future of the company or to us. explore these possibilities, “he said.

The bank, which booked a restructuring fee of $ 718 million in the third quarter, is expected to book another charge in the fourth quarter, Scharf added.

When asked when he expected Wells Fargo to resume buying back its shares, the CEO hinted that it could do so in the second half of next year.

“There is considerable excess capital that could be used both through buybacks, but at some point it will certainly increase dividends if we continue to increase earnings capacity,” said Scharf.

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