The press storm generated by the Wells Fargo accounts scam looks a bit too much when compared with the potential impact of these negative practices on the bank's performance. But Wells Fargo CEO, 33 years veteran John Stumpf, is right now in the eye of the hurricane, and persistent rumours about his retirement have appeared in the specialist press.

If Stumpf leaves, the extra value Wells Fargo stock price has historically enjoyed could become a discount in case the remaining team is perceived as suboptimal by the markets.

WFC has generated a media storm and negatively surprised shareholders, clients and the general public with the announcement of a scandal involving the opening of close to two million fake accounts by overworked employees.

With the information available at this point, the press storm generated by this scam looks a bit too much when compared with the potential impact of these negative practices on the bank's financial performance or on the level of service clients get from Wells Fargo. Nevertheless, the issue is a public relations disaster for a bank with the reputation for being one of the few honest and "communities-based" banks in the US. And this happens at a moment in which big banks are deeply hated by the American public and the regulator.

Under extreme pressure, staff of Wells Fargo created circa 2 million fake accounts in order to meet daily targets. As a result, internal HR managers have fired 5, employees.

Worse developments are coming to light: The legal logic of the class action is that employees who followed the rules were penalized, being demoted or fired, and those who created the fake accounts were rewarded.

The lawsuit focuses on employees who worked for Wells Fargo during the last 10 years in California; thus, there is the possibility that similar legal actions are brought to court across other states of the US. The scandal will be magnified and might become costly for the bank if class actions asking for damages do escalate. Nevertheless, looking at things with a wider horizon, this scandal should not affect the bottom line of Wells Fargo or its reputation in the long term, even if the stock is being hammered now.

There is a growing uncertainty that could completely change things, though: Wells Fargo CEO, 33 years veteran John Stumpf, is right now in the eye of the hurricane, and persistent rumours about his retirement have appeared in the specialist press. Speculation on his number two, Tim Sloan, taking over the first job at Wells Fargo have been rampant. In his interview with The Banker, " The Fargo Way: John Stumpf on Wells Fargo's team spirit , " in , John Stumpf explains his managerial philosophy at Wells Fargo based on teamwork, a focus more on clients than on profits, modesty, unpretentiousness and courtesy: Stumpf's managerial philosophy and personality seem fully fit to run a commercial bank: Over 33 years, Stumpf has crafted a management team that has led to extraordinary results; all his deputies have similar traits: But it is very difficult to assess if such a team could work as well as it has in the past in the case of John Stumpf retiring or if senior executives could find a CEO replacement accepted by all of them.

Warren Buffett Is Selling Wells Fargo Stock -- Should You Do the Same? -- The Motley Fool

Tim Sloan, his number two, is an efficient organizer and veteran banker from the investment banking side of Wells Fargo. John Schrewsberry, current CFO, Yale MBA and Goldman Sachs alumni, has 22 years of banking experience as well, particularly focused on investment banking and principal investments. Avid Modjtabai is the head of Wells Fargo Consumer Lending Group and Operations, leading circa 65, employees and serving 27 million clients across the US; she has 23 years of experience at Wells Fargo, mainly in technology, and as most of the management team, she is highly qualified - with a degree in Industrial Engineering and a Stanford MBA.

Other key executives are Chief Risk Officer Michael Loughlin, David Carroll, head of Wealth Management, and Richard Levy, Controller of the Group. One of the key questions that has contributed to reducing the historic "quality premium" of Wells Fargo share price over the past few weeks is: The truth is that we do not know.

But what we do know is that the premium at which Wells Fargo has historically been quoted compared with most US competitors - SunTrust NYSE: STI , Bank of America NYSE: BAC , JPMorgan NYSE: JPM - is a direct function of the extra profits generated by this outstanding team.

It is extremely difficult to find commercial bankers that produce superior returns in the long term because the necessary mix of prudence, ambition, cunning, humility, discipline and lending subtleness is indeed rare; we can mention Richard Davis at US Bancorp NYSE: MTB ; in Europe, Brian Pitman at Lloyds NYSE: LYG in the '80s, Baudouin Prot at BNP OTCQX: BNPQF and Enrico Cuccia at MedioBanca OTC: MDIBF are examples of this infrequent - and profitable - ability.

Looking at his track record, we can safely conclude that John Stumpf is one of them. The extra value Wells Fargo stock price has historically enjoyed has been partially lost over the last few weeks, but it could fully disappear and become a discount if Stumpf leaves and the remaining team is perceived as suboptimal by the markets.

Why You Should Sell Wells Fargo Stock Now - Cabot Wealth Network

The evolution of the stock price since the crisis has been excellent until this year: Finally, a sharp fall followed the disclosure of Wells Fargo regulatory problems with the circa 2 million fake accounts created by employees.

The possibility of a managerial failure due to a power vacuum is a risk a prudent investor in banks should avoid, particularly when other top-performing options in the commercial banks space are available in the US.

If Stumpf goes, Wells Fargo will be a sell, at least in the short and mid-term until the new CEO and his management team are able to prove they are at the high level of their retired predecessor.

Wells Fargo & Co - NYSE:WFC - Stock Quote & News - TheStreet

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha.

I have no business relationship with any company whose stock is mentioned in this article. Long Ideas Short Ideas Cramer's Picks IPOs Quick Picks Sectors Editor's Picks. If Stumpf Leaves Wells Fargo, The Stock Is A Sell Sep. Summary The press storm generated by the Wells Fargo accounts scam looks a bit too much when compared with the potential impact of these negative practices on the bank's performance.

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