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Wells Fargo's chief executive Tim Sloan in Washington, U.S., Oct. 3, 2017.AARON P. BERNSTEIN/Reuters

Wells Fargo’s chief executive says the American banking behemoth is looking to expand its Canadian wholesale banking business, as he grapples with the aftermath of a massive sales-practice scandal.

Canadian banking is littered with global giants who expand here during boom times, only to turn their backs when a contraction or crisis hits. Reeling from the Great Recession, ING Groep sold its Canadian arm to Bank of Nova Scotia in 2012; a year later, UBS AG also initiated a retreat.

Wells Fargo is still rebounding after its own crisis, sparked by the 2016 revelation that the bank opened millions of fake bank and credit-card accounts to juice its growth in the United States, leading to the departure of chief executive John Stumpf and the turnover of much of its board. The recovery is still a work in progress, and has included a US$1-billion fine from the Consumer Financial Protection Bureau, a pledge to take responsibility for misdeeds and a big advertising campaign designed to help the bank move past the trauma.

Despite the continuing distractions, the new leadership team is still eyeing a Canadian expansion. To stress this agenda, CEO Tim Sloan visited Montreal and Toronto last week, meeting with clients and investors. In an interview during the tour, he emphasized the bank’s commitment here, arguing that expanding in Canada “is a natural extension for us.”

A native of the Great Lakes region – born in Cleveland, raised in Detroit – Mr. Sloan, 58, sees Canada as a perfect fit for Wells Fargo. To start, he has deep respect for the financial system. “The quality of the banks here in Canada is exceptional. They’re all very well run,” Mr. Sloan said. “I’m seldom this complimentary about our competition.”

He also sees a lot of similarities. “The business philosophy, the strategy of the Canadian banks, tends to be very similar to how we think,” he added.

Before its sales-practice scandal came to light, Wells Fargo was praised for its commitment to old-fashioned banking, winning investors over by catering to retail clients and focusing on lending − as opposed to betting heavily on high-risk products such as mortgage-backed securities.

In other words, for looking a lot like a Canadian bank.

While Wells Fargo’s strategy backfired in part because of aggressive sales goals, its wholesale unit was relatively unscathed − and that is where Mr. Sloan spent most of his three-decade tenure with the bank.

Wells Fargo’s Canadian arm is in a similar boat. Rather than open a retail division here, the bank obtained a banking licence in 2012 and has relied on corporate loans to establish business relationships − the same strategy used by Royal Bank of Canada for its wholesale push into the United States starting in 2009. At the end of 2017, Canada ranked second only to Britain in the size of Wells Fargo’s foreign footprint, with US$18.3-billion of exposure on its books.

Lately, Canada looks particularly enticing to Mr. Sloan because its economy has been resilient. The housing-market crash that some American short-sellers predicted never materialized, and the collapse of commodity markets did not leave behind profound carnage.

During the worst of the energy crash in 2016, Mr. Sloan acknowledges he worried, because Wells Fargo is a major lender to the energy sector. But a Canadian banker gave him comfort. “I talked to [Canadian Imperial Bank of Commerce CEO] Victor Dodig, who’s a good friend. He reminded me, ‘These are non-recourse loans, Tim,’” Mr. Sloan said. The money borrowed by Canadian energy companies was secured. “The U.S. is a different deal. [Borrowers] can walk away.”

Still, two major questions linger.

The market’s remarkable bull run is nearly 10 years old, and a downturn could test Wells Fargo’s commitment.

On this front, Mr. Sloan isn’t fussed. He said there’s a “cogent argument” that the market expansion is in the seventh of nine innings, but “the question is whether we go into extra innings." He’s "fairly optimistic” about the Canadian and American economies for the next few years.

The bank’s sales-practice scandal also lingers, and Wells Fargo continues to take heat from U.S. regulators. In a highly unusual move, the Federal Reserve told the bank in February that it would not be able to grow its balance sheet beyond US$1.95-trillion in assets until it fixes its internal controls. In April, Wells Fargo was hit with a US$1-billion fine for allegedly forcing auto insurance on customers and for allegedly imposing inappropriate charges on home buyers.

Amid the continuing damage, Mr. Sloan has faced criticism for not turning the bank around fast enough. Major rivals JPMorgan, Bank of America and Citigroup are all seeing their earnings grow faster of late, which has contributed to better stock-market performance.

Facing a long, tough turnaround, Mr. Sloan has lately acted with more urgency, including announcing plans to slash up to 10 per cent of the bank’s global work force, or 26,500 jobs to boost efficiency. The CEO said he is also spending more time talking to regulators in Washington, and added that more stock buybacks are likely.

But he stressed the importance of employee morale. The bank has committed to paying all U.S. employees a minimum wage of US$15 an hour, and it has also made every staff member a shareholder. “We had this great reputation," Mr. Sloan said, something that once made employees so proud, "and all of a sudden, we didn’t.”

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