Wells Fargo plans to cut staff up to 10% within next three years

Bank is struggling to cut spending amid regulatory fines and higher legal costs stemming from scandals

Sep 20, 2018 @ 3:41 pm

By Bloomberg News

Wells Fargo & Co. plans to trim its workforce by about 5% to 10% within the next three years as CEO Tim Sloan works to pull the bank clear of a series of customer-abuse scandals and prop up a lagging stock price.

The bank had 265,000 employees as of June 30, according to a regulatory filing. Head count has been declining as Mr. Sloan works to clean up the bank and streamline its operations. The CEO made the announcement to employees at a town-hall meeting.

"It says something about the revenue environment for them," Charles Peabody, an analyst at Portales Partners, said in an interview. "If they're not in the midst of recognizing that revenues are in trouble, they're anticipating it."

Wells Fargo has been struggling to cut spending amid regulatory fines and higher legal costs stemming from a string of customer abuses that erupted in 2016. The bank has pledged $4 billion in expense reductions by the end of next year.

"We are continuing to transform Wells Fargo to deliver what customers want — including innovative, customer-friendly products and services — and evolving our business model to meet those needs in a more streamlined and efficient manner," Mr. Sloan said Thursday in a statement.

Mr. Sloan, who took the helm almost two years ago during a scandal over falsified accounts, has worked to stabilize the bank. He's shuffled executives and reworked internal controls while traveling the country to espouse a commitment to customer service.

By a number of yardsticks, the bank hasn't yet persuaded investors it's on the rebound. While the stock has climbed 23% since Mr. Sloan became CEO, it's trailing the 53% advance of the broader KBW Bank Index. Rivals JPMorgan Chase & Co. and Bank of America Corp. have gained 75% and 95%, respectively.

Speculation that the bank wants a new CEO spilled into public this week when the New York Post said the board had approached former Goldman Sachs executive Gary Cohn. Mr. Cohn, who earlier this year finished a stint as a White House adviser, denied in the report as did Wells Fargo Chair Betsy Duke, who said that Mr. Sloan "has the unanimous support of the board, and this support has never wavered."

Analysts cut their estimates for Wells Fargo earnings again and again after the Federal Reserve punished the bank with an unprecedented cap on growing assets. The analysts began this year predicting a record $24 billion annual profit, and now the average estimate is for less than $21 billion, the weakest since 2012.

(More: Wells Fargo Advisors continues to see a decline in brokers)?

0
Comments

What do you think?

View comments

Recommended for you

Advisers on the Move

Featured video

INTV

How InvestmentNews picks its Women to Watch winners

The process is laborious and exacting, but well worth it. The end result each year is an impressive group of women in the advice industry from whom others can draw inspiration.

Latest news & opinion

Some good news about female recruitment in financial advice

Each of four core advisory positions tracked in InvestmentNews' benchmarking study has seen an uptick in women entrants.

10 ETFs that are up more than 35% this year

Amid the stock market carnage, there are still some funds posting big gains.

10 biggest HSA providers rated

Morningstar rated the largest plan providers as investment and spending vehicles.

Morningstar: DOL fiduciary rule reduces inflows to mutual funds with high loads

With the measure's demise, will the SEC's advice reform sustain the momentum?

6 tax strategies for year-end planning

How to help clients maximize their wealth using specific tax strategies before the end of the year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print