- Wells Fargo has begun a much-anticipated round of job cuts, Bloomberg reported Friday, citing a bank spokesperson.
- Initial layoffs will affect employees the bank had planned to cut this year before the coronavirus led Wells Fargo to pause headcount reduction, sources told the wire service.
- Further reductions will stem from existing efforts to cull management ranks, jettison underperformers and reduce expenses, Bloomberg's sources said.
"Starting in early August, we resumed regular job displacement activity," Wells Fargo spokesperson Beth Richek told Bloomberg in a statement. "We are at the beginning of a multiyear effort to build a stronger, more efficient company."
Reports surfaced in July that the bank was drafting plans that could cut tens of thousands of positions. Those cuts, Richek said, will result from attrition, job displacements and the elimination of open roles.
Wells Fargo CEO Charlie Scharf last month told analysts he was looking to trim $10 billion in costs. The bank may shed up to $1.5 billion a year by cutting consultancies, the Financial Times reported. The cost-cutting effort comes on the heels of a quarter in which the bank posted its first loss since 2008 and had to cut its dividend by 80%.
"We have a series of employees who've been told that their jobs will ultimately go away," Scharf told the analysts, "but we are going to let some time pass as we got through the initial stages of the COVID crisis."
Wells was not alone in its strategic pause. HSBC, which this year laid out a plan to cut 35,000 employees in the next three years, said in June it was restarting its cull. Similarly, Deutsche Bank recently resumed its plan to cut 18,000 jobs by 2022. Other European banks, such as NatWest and ABN Amro, have announced cuts in recent weeks.
The resumption of cuts does run counter to the strategy of several U.S. banks, such as Morgan Stanley, which vowed to make no reductions in headcount this year. Others, such as Citi and Bank of America, have added thousands of employees this year.
The scope of Wells Fargo's layoffs is still to be determined. "It's like an onion: The more we do, the more clearer the next round will become," Scharf told analysts last month.
The San Francisco-based lender's move to trim management layers comes amid a restructuring of Wells Fargo's risk team, wherein the bank added chief risk officers in each of the bank's divisions.