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Wells Fargo in Restructuring Mode, Terminates More Than 700 Jobs
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At a time when a number of top companies have put the brakes on job cuts and are trying to offer stability to employees amid the coronavirus pandemic, Wells Fargo (WFC - Free Report) has done otherwise. Per a Bloomberg report, the bank resumed its retrenchment process under the mounting pressure for cost reduction and has terminated more than 700 commercial-banking jobs. Further, the bank is planning aggressive job cuts in the coming period.
Notably, the commercial banking division provides various services to businesses having more than $5 million in annual sales. Some reductions have been confirmed by Katie Ellis, a Wells Fargo spokeswoman.
“We are at the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities and shareholders,” Ellis said in a statement. “As part of this work, we will have impacts, including job reductions, in nearly all of our functions and business lines, including commercial banking, where we have started displacements,” she noted.
Wells Fargo, which has been witnessing a significant rise in operating expenses since the revelation of the sales scandal in 2016, hasn’t undertaken any large-scale job cut over the past decade. Now, with the heightening pressure to boost financials amid the coronavirus pandemic-related concerns, the bank intends to shrink its workforce. As of Jun 30, 2020, it had approximately 266,300 employees.
The company’s CEO Charlie Scharf had already raised concerns over its inflating costs, stating “our expenses are way too high”, during an investor conference in May. During the second-quarter earnings call, Scharf announced management’s plan to reduce annual expenses by $10 billion.
Wells Fargo’s cost-cutting plans would also include branch closures and consolidation, along with the retrenchment of tens of thousands of workers. Remarkably, the affected employees would be provided with severance and career assistance by the bank. The bank expects “to reduce the size of our workforce through a combination of attrition, the elimination of open roles and job displacements,” Ellis further noted.
Conclusion
Since joining Wells Fargo in October 2019, Scharf has been reviewing the company’s businesses. He has been developing strategies that are expected to make some reductions in workforce. Wells Fargo’s sales scam allegation has resulted in many setbacks, including the banking giant’s tainted image, numerous lawsuits, triggered federal and state investigations, and congressional hearings. Moreover, the bank has been unable to maintain profitability as compared with the set targets.
It also aims to control costs through consolidating its operations, processes’ improvement through technology and mechanization, as well as the outsourcing of certain operations.
Currently, Wells Fargo carries a Zacks Rank #4 (Sell). The company’s shares have plunged 53.9%, so far this year, compared with the industry’s decline of 35.7% during the same time frame.
Over the past few months, Wells Fargo has moved away from several businesses, including student lending, home equity loans, jumbo loan refinancing and independent auto dealerships.
Other Banks’ Moves
Per the source, among others, Citigroup (C - Free Report) , Goldman Sachs (GS) and JPMorgan (JPM - Free Report) have consummated their targeted reductions. However, Bank of America (BAC - Free Report) chief executive officer Brian Moynihan remains firm on its no-layoff pledge for 2020.
Overall, per Bloomberg’s data, globally, more than 30 banks have planned workforce reductions of about 68,000. This includes HSBC Holdings’ plan to cut jobs by 35,000 for trimming $4.5 billion of costs at the underperforming units in the United States and Europe, announced this February.
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Image: Bigstock
Wells Fargo in Restructuring Mode, Terminates More Than 700 Jobs
At a time when a number of top companies have put the brakes on job cuts and are trying to offer stability to employees amid the coronavirus pandemic, Wells Fargo (WFC - Free Report) has done otherwise. Per a Bloomberg report, the bank resumed its retrenchment process under the mounting pressure for cost reduction and has terminated more than 700 commercial-banking jobs. Further, the bank is planning aggressive job cuts in the coming period.
Notably, the commercial banking division provides various services to businesses having more than $5 million in annual sales. Some reductions have been confirmed by Katie Ellis, a Wells Fargo spokeswoman.
“We are at the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities and shareholders,” Ellis said in a statement. “As part of this work, we will have impacts, including job reductions, in nearly all of our functions and business lines, including commercial banking, where we have started displacements,” she noted.
Wells Fargo, which has been witnessing a significant rise in operating expenses since the revelation of the sales scandal in 2016, hasn’t undertaken any large-scale job cut over the past decade. Now, with the heightening pressure to boost financials amid the coronavirus pandemic-related concerns, the bank intends to shrink its workforce. As of Jun 30, 2020, it had approximately 266,300 employees.
The company’s CEO Charlie Scharf had already raised concerns over its inflating costs, stating “our expenses are way too high”, during an investor conference in May. During the second-quarter earnings call, Scharf announced management’s plan to reduce annual expenses by $10 billion.
Wells Fargo’s cost-cutting plans would also include branch closures and consolidation, along with the retrenchment of tens of thousands of workers. Remarkably, the affected employees would be provided with severance and career assistance by the bank. The bank expects “to reduce the size of our workforce through a combination of attrition, the elimination of open roles and job displacements,” Ellis further noted.
Conclusion
Since joining Wells Fargo in October 2019, Scharf has been reviewing the company’s businesses. He has been developing strategies that are expected to make some reductions in workforce. Wells Fargo’s sales scam allegation has resulted in many setbacks, including the banking giant’s tainted image, numerous lawsuits, triggered federal and state investigations, and congressional hearings. Moreover, the bank has been unable to maintain profitability as compared with the set targets.
It also aims to control costs through consolidating its operations, processes’ improvement through technology and mechanization, as well as the outsourcing of certain operations.
Currently, Wells Fargo carries a Zacks Rank #4 (Sell). The company’s shares have plunged 53.9%, so far this year, compared with the industry’s decline of 35.7% during the same time frame.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past few months, Wells Fargo has moved away from several businesses, including student lending, home equity loans, jumbo loan refinancing and independent auto dealerships.
Other Banks’ Moves
Per the source, among others, Citigroup (C - Free Report) , Goldman Sachs (GS) and JPMorgan (JPM - Free Report) have consummated their targeted reductions. However, Bank of America (BAC - Free Report) chief executive officer Brian Moynihan remains firm on its no-layoff pledge for 2020.
Overall, per Bloomberg’s data, globally, more than 30 banks have planned workforce reductions of about 68,000. This includes HSBC Holdings’ plan to cut jobs by 35,000 for trimming $4.5 billion of costs at the underperforming units in the United States and Europe, announced this February.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>