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The Goldman Sachs Group, Inc. (GS) - free report >>
Wells Fargo & Company (WFC) - free report >>
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Wells Fargo (WFC) Might Halt Pay Raises to Save Expenses
Wells Fargo & Company (WFC - Free Report) is mulling to suspend salary hike of the bank’s top earners with an aim to achieve its cost-cutting target. The news was reported by Bloomberg, citing people with knowledge of the plans.
Per the article, the company will not be increasing base pay in 2021 for employees who are earning more than $150,000. The effort is supposedly to support less earning positions, at the time when Wells Fargo is undergoing restructuring and facing challenging environment due to the pandemic.
In another move to reduce costs, the bank resumed its jobs cutting drive in August, post the coronavirus-induced pause. Notably, Wells Fargo axed about 700 commercial-banking jobs earlier this month. Citigroup (C - Free Report) , HSBC Holdings (HSBC - Free Report) and Goldman Sachs (GS - Free Report) are among other banks that have resumed job cuts.
Moreover, the company had previously announced plans to stop matching contributions to 401(k) retirement system for employees who earn more than $250,000 annually, but had to take back the decision after facing criticism.
These moves form part of CEO Charlie Scharf plans to save about $10 billion in annual expenses. The plan was announced during the second-quarter earnings call, and expected to be achieved through branch closures and layoffs.
OurTake
Following the fake accounts scandal, Wells Fargo has undertaken several restructuring measures to focus on its core operations, improve efficiency and strengthen the balance sheet. However, with the ongoing review process of business practices and a limit on asset growth, Wells Fargo’s top line might remain under pressure.
The stock has lost 11.5% in the past six months against 9.1% growth for the industry.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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