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Wells Fargo CEO quits after sham accounts scandal

The US bank Wells Fargo chairman and CEO John Stumpf has resigned. His move - with immediate effect - follows a sham accounts scandal that made his continued leadership untenable.

Stumpf's exit from the US commercial and retail bank follows the bank admitting last month that employees had opened millions of deposit and credit card accounts without customers' knowledge to meet sales quotas.

A spokesman for the San Francisco bank on Wednesday said there would be "no severance payment or agreement related" to Stumpf's departure. "There are some retirement benefits that are detailed in our proxy statement. They are not accessible for the next 6 months. That is a normal lag time," the spokesman said in a statement.

Employees in Wells Fargo's community banking division opened about 2 million accounts without customer authorization, which resulted in the bank paying $185 million in penalties. Stumpf was questioned in September on Capitol Hill and defended the bank's sales practices. Sen. Elizabeth Warren meanwhile accused Stumpf of "gutless leadership." Since then Stumpf has also testified to a House committee. Wells Fargo's third-quarter filing with the SEC should be full of new disclosures that summarize these actions and, perhaps, announce new ones.

Employees laid off

On Monday, bank Stumpf and President Tim Sloan led a conference call with 500 executives to lay out responses to the scandal, including the addition of 2,000 risk management employees and a series of branch tours by the new head of retail banking, according to the Wall Street Journal.

Most stock analysts covering Wells Fargo have cut profit forecasts, citing fallout from the scandal. The bank's shares have fallen 8.7 percent since the scandal broke. Fitch Ratings meanwhile also cut the bank's credit rating outlook to "negative," citing potential profit erosion.

The company's board of directors elected Wells Fargo President and Chief Operating Officer Tim Sloan to succeed as CEO.

The troubles are the latest in a long line of banking scandals that involve quasi-ethical corner cutting and at times outright illegality.

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jbh/rc (AFP, AP)

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