(Reuters) - Wells Fargo & Co’s plan to bring in an outsider as its next chief executive could give the scandal-plagued bank a much needed fresh start, but a turnaround will not be easy for whoever takes the helm, analysts said.

FILE PHOTO: A Wells Fargo logo is seen in New York City, U.S. January 10, 2017. REUTERS/Stephanie Keith

The fourth-largest U.S. bank by assets said on Thursday that CEO Tim Sloan, a 31-year Wells Fargo veteran, would resign immediately and a committee would meet on Friday to start looking for a replacement from outside the bank.

More than two years after its wide-ranging sales practices scandal first came to light, Wells Fargo is still struggling to repair its reputation and relationship with U.S. regulators.

“Reforming decades of past mistakes at an institution as large as Wells is a difficult and time-consuming endeavor,” said Morningstar analyst Eric Compton in a note on Friday.

Wells Fargo shares were down 2.2 percent to $48.02 on Friday, after jumping more than 2.7 percent after the bank announced Sloan’s resignation on Thursday.

Investors are pondering what the change in leadership will actually mean for the bank over the next year or two, Marty Mosby, an analyst at Vining Sparks IBG, said in a note on Friday.

“The intermediate transition period will not likely be as productive as we had been assuming, and the longer-term ramifications won’t be played out for years,” Mosby said.

Admissions by the bank that it opened potentially millions of unauthorized accounts and improperly charged customers for services have resulted in billions of dollars in fines and settlements since 2016.

The Federal Reserve has also placed an unprecedented restriction on Wells Fargo to keep it from growing its balance sheet until it proves risk management controls are improved.

“It does seem that Wells Fargo management has lost the confidence of regulators,” Minneapolis Federal Reserve President Neel Kashkari told Reuters on Friday. “It will be important to put in a CEO that can regain that confidence.”

It remained unclear what exactly triggered Sloan’s abrupt departure. Sloan, who had been CEO since after the scandal erupted in 2016, said he made the decision because the focus on him was hampering the bank’s recovery.

Sloan twice disappointed investors by pushing back the date he expected to get the asset cap removed.

When the consent order was announced in February 2018, he said reviews of its plan to meet the Fed’s request would be completed in October of that year. In May he said the cap would be lifted in early 2019, but in January he told analysts he expected the bank to operate under the cap through 2019.

Analysts still say that timeline is too ambitious.

“We do not expect the asset cap to get lifted until mid-2020,” said Citigroup Inc’ analyst Keith Horowitz in a note on Thursday.

KBW’S Brian Kleinhanzl also wrote in a note that the bank seems to be far from convincing the Fed that it has made sufficient changes.

Banks typically operate under consent orders from the Fed for many years. The Fed has yet to end a 2013 enforcement order against JPMorgan Chase & Co related to its London Whale scandal, according to an analysis of the U.S. central bank’s public notices. A 2011 consent order against 10 banks related to crisis-era mortgage practices ended last year.

Wells Fargo executives did not provide new information about when they expected the Fed to lift the asset cap on Thursday.

TRIMMING COSTS

Outside of regulatory pressures, the new CEO will also be faced with investors who want management to shore up the bank’s core business. Wells Fargo was the only bank among the top four U.S. lenders to not grow loans or deposits over the past two years, according to Refinitiv data.

While current executives have suspended the bank’s 2020 expense target to give a new CEO room for a novel strategy, analysts expect incoming management to maintain Wells Fargo’s approach of growing profits by getting leaner.

“I think the new CEO is going to take the path of trimming costs and buying back stocks and you still won’t see a lot of balance sheet expansion in terms of loan growth because they are under that cap,” said Edward Jones analyst Kyle Sanders.

Wells Fargo Board Chair Betsy Duke did not give clear guidelines on what kinds of candidates the board is looking for.

The next CEO will likely be a finance executive with experience with consumer banking and digital strategy, as well as the ability to smooth relationships with Washington, analysts said.

Citi’s Horowitz said JPMorgan Chief Financial Officer Marianne Lake, who has experience running the consumer bank at the largest U.S. bank by assets, would be his first call.

A seasoned executive from a financial technology company already based in San Francisco could also be a good fit, said Edward Jones’ Sanders.