“Let the bosses take the losses!” The rallying cry of disaffected workers seems for once to have been heeded as the heads of Wall Street’s most senior executives continue to roll, with Citi’s Charles Prince and Merrill Lynch’s Stanley O’Neal joining UBS’s Peter Wuffli as the latest casualties of the subprime-led credit debacle. True, they’ll all walk away with handsome packages, but in these cases, anyway, the chieftains have been held accountable for the calamities on their watch.
Less clear is what their departures mean for the futures of the firms they led. Much has been made of the lack of clear succession planning at Citi and Merrill: Both firms are scrambling to find new CEOs, reportedly looking internally and externally. The crucial issue, though, may not just be identifying suitable leaders but re-locating core identities that have seemingly been mislaid as these firms have become increasingly complex global enterprises. Is Merrill really comfortable continuing to make big proprietary bets? When did Citi decide it would no longer define itself as a retail or technology leader? Answering questions like these can be a maddeningly vague assignment, shaded by the kinds of soft issues, like culture and vision, that are
difficult to quantify and that on the individual human level lead to enormous bills for therapy. Citi and Merrill have paid their bills in a different way.
In this month’s issue we focus on one bank, Wells Fargo, that has embraced issues of culture and vision with a passion under the leadership of Richard Kovacevich, a onetime senior Citi executive who may have been if not the best then certainly the most underappreciated bank CEO of the past two decades. As Contributing Writer John Engen shows in “All’s Wells,” beginning on page 42, Kovacevich kept his institution sharply focused on becoming the leading consumer bank in 23 states in the West and Midwest. He and his team fashioned a powerful sales culture while eschewing financial fads: Kovacevich steered clear of investment banking and international expansion. Today, Wells is the only U.S. bank with a triple-A rating; it ranks fourth by market capitalization and fifth in assets. It has taken some lumps from being the No. 1 mortgage servicer and No. 2 mortgage originator in the country but nonetheless managed to post record profits in the third quarter, even as other banks and investment banks were announcing record write-offs.
Perhaps most revealing, when Kovacevich chose to step down as CEO in June (he remains as chairman through 2008), Wells Fargo did not have to hurriedly put together a search committee to find a successor. It had long groomed internal candidates and turned the reins over, without a hitch, to president John Stumpf, a veteran of the bank who is imbued with its culture.
These bosses seem to know how to avoid the losses.
