“We are not surprised by Thursday’s announcement as ongoing Congressional opprobrium and heightened regulatory scrutiny had made Sloan’s position at the company increasingly tenuous, in our view,” RBC Capital Markets analysts wrote in a note to clients on Thursday.
They believed a change in leadership was a likely due to the bank’s ongoing regulatory scrutiny — and its Federal Reserve-ordered limit on growth— stemming from its fake accounts scandal that erupted in 2016.
Read more: Wells Fargo CEO Tim Sloan is retiring
The 31-year Wells Fargo veteran, Sloan, was chosen in the scandal’s wake that year to lead the bank after then CEO John Stumpf, himself a three-decade Wells Fargo employee, announced his own retirement.
A little over two years later, Wall Street analysts are wary of what’s to come as Wells Fargo searches for an external candidate. Some said Sloan’s stepping aside means the bank can now better handle a variety of regulatory issues, while others were concerned about a fresh element of uncertainty.
“In a way, his reign was doomed to start given he was an internal candidate tasked with upending WFC business practices and culture,” Piper Jaffray analysts led by Kevin Barker wrote in a note to clients on Thursday.
Earlier this month, Sloan testified before the House Committee on Financial Services about the bank’s response to a string of scandals. He was the first bank executive to address the committee since it was taken over by the Democrats.
“Wells Fargo is a better bank than it was three years ago, and we are working every day to become even better,” he said at the time.
Morgan Stanley analysts told clients after the Thursday announcement that Sloan was “proactively stepping aside to enable the company to move forward.”
Here’s a look at what some analysts are saying about Wells Fargo’s announcement, and what might come next: