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Wells Fargo ends 2021 with 7.1% reduction in overall job positions

Wells Fargo ends 2021 with 7.1% reduction in overall job positions

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Wells Fargo & Co. continued to show in the fourth quarter incremental progress in its $8 billion, multi-year cost-cutting initiative that was launched in January 2021.

Charles Scharf (Wells Fargo & Company)


However, the $1.93 trillion asset cap overshadowing Wells Fargo & Co. for nearly four years remains unlikely to be lifted by the Federal Reserve in the near term. The cap was put into place Feb. 3, 2018.

Those issues are related to the fraudulent customer-account scandal that surfaced in September 2016.

Much of the savings involves eliminating management layers, making additional branch and workforce cuts, and reducing by up to 20% its office space by the end of 2024.

Since the start of 2021, Wells Fargo has eliminated 19,096 job positions, or 7.1%, for an overall workforce total of 249,435 as of Dec. 31.

That includes reducing its work force by an overall 4,436 job positions during the fourth quarter.

The largest year-over-year workforce reduction has occurred in the consumer banking and lending segment, which dropped 10% from 125,034 to 112,913 employees.

Other workforce segment involve: corporate down 4% to 83,730; wealth and investment management down 8% to 25,906; commercial banking down 9% to 18,397; and corporate and investment banking up 4% to 8,489.

Charlie Scharf, who became chief executive in October 2019, said in October 2020 that getting the Fed to lift the asset cap will require additional cost-cutting over the next two to four years.

Scharf has said about $3.7 billion of the cost cutting will have taken place by the end of 2021.

On Friday, the bank reported having $13.2 billion in non-interest expenses, down 0.7% from the third quarter, but also down 10.8% from a year ago. For fiscal 2021, non-interest expenses were down 6.6% to $53.83 billion.

It also is down 245 branches to 4,777 since the latest cost-cutting initiative commenced. That includes closing 19 branches during the fourth quarter.

To put the cuts into perspective, Wells Fargo has dropped from about 6,600 branches in 2009, when it acquired a collapsing Wachovia Corp. and gained an East Coast presence.

The bank has said it has about 2,900 local employees, who make up the bulk of the 3,600 in Wells Fargo’s 32-county Triad West region. It also has about 27,000 employees in Charlotte.

Regulatory update

In the past five years, Wells Fargo has had four chief executives, five chairpersons and substantial shake-ups of its board of directors and executive management team.

“We also remain cognizant that we still have a multiyear effort to satisfy our regulatory requirements — with setbacks likely to continue along the way — and we continue our work to put exposures related to our historical practices behind us,” Scharf said in Friday’s statement.

Scharf told analysts that “we still have a substantial amount to do” in terms of regulatory compliance.

“It’s really not right for me to talk about under any specific consent order where we think we are in the process because, again, what I said ultimately is what’s going to matter is whether our regulators believe it’s done to their satisfaction.””

“It’s really unhealthy to get into the game of ‘do we think we’re done? Do we think they’re making the right conclusions?’ “

Scharf said “it’s on us to continue to do all that’s necessary. And when they’re comfortable that we’ve satisfied those obligations, they will make that determination.”

In September, Wells Fargo set aside $250 million toward a civil penalty implemented by federal regulator the Office of the Comptroller of the Currency. The fine was paid to the U.S. Treasury.

The OCC said Sept. 10 that the fine is “based on the bank’s unsafe or unsound practices related to deficiencies in its home lending loss mitigation program and violations of the 2018 compliance consent order.”

“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable,” Michael Hsu, the OCC’s acting head official, said in a statement.

Counting the latest civil penalty, Wells Fargo has agreed to pay more than $7.25 billion to settle various regulatory and legal disputes since the fall of 2016.

Several media outlets, led by Reuters, reported Sept. 22 that Fed chairman Jerome Powell said the asset cap — put in place Feb. 3, 2018 — will remain until the Fed is confident that Wells Fargo has resolved a series of internal governance and risk-control issues.

Reuters reported Powell as saying the Fed is monitoring Wells Fargo’s resolution efforts closely and that “we’re not going to remove that asset cap until that’s done.”

Powell has issued similar cautionary comments for much of the asset-cap period.

“As we look forward, we will continue to be aggressive in driving progress and improvement in our performance, embrace our responsibility to our customers and communities,” Scharf said.

“I remain incredibly optimistic about our future.”




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