“Starting in early August, we resumed regular job displacement activity,” Beth Richek, a spokesperson for the bank, said in a statement provided to the news service.
“We are at the beginning of a multi-year effort to build a stronger, more efficient company,” Richek said. “We expect to reduce the size of our workforce through a combination of attrition, the elimination of open roles and job displacements.”
The job cuts follow the San Francisco-based lender’s sale of hundreds of millions of dollars in assets earlier this year in order to meet the $1.95 trillion asset limit imposed on it by the Federal Reserve after its fake-accounts scandal, according to a Wall Street Journal report.
Like many other banks, Wells Fargo is having to sharply increase its loan-loss provisions. However, unlike most rivals, it is turning to job cuts as a means of improving its financial situation.
Details on Job Cuts
The initial cuts are set to affect employees whose positions were scrutinized before the pandemic, which put a stop to the planned layoffs, sources briefed on the situation told Bloomberg.
On a call with analysts in mid-July — after the bank reported its first quarterly loss since 2008 — CEO Charlie Scharf said: “We have a series of employees who’ve been told that their jobs will ultimately go away.”
The executive added, “we are going to let some time pass as we go through the initial stages of the COVID crisis.”
The bank lost $2.4 billion in the second quarter, or $0.66 per share, vs. profits of $6.2 billion, or $1.30 per share, a year ago and $653 million, or $0.01 per share, in the first quarter.
During the call on July 14, Scharf and other executives said the bank will begin trimming costs in the second half of 2020 and plans to cut at least $10 billion of expenses, including those tied to management and noncore activities.
“This cannot continue,” Scharf said on a conference call with analysts Tuesday after it announced its latest earnings, according to a Bloomberg report. “There’s no reason why as a management team we don’t have the ability to be as efficient as the rest.”
Additional job reductions for the upcoming weeks and months should focus on management ranks, those who are underperforming and those whose posts can best help the bank lower costs, sources told Bloomberg.
A strategic review including the ultimate decisions on how many cuts will be made and were is ongoing.
“It’s like an onion: The more we do, the more clearer the next round will become,” Scharf said on the call.
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