American multinational financial services company Wells Fargo is planning to cut its headcount by about 5 to 10 percent over the course of next three years as part of a turnaround plan.
In a statement on Thursday (Sept 20), the company said that the latest reduction would reflect displacements as well as normal team-member attrition. As of June 30th this year, Wells Fargo had roughly 264,500 employees, meaning that it sets to cut up to 26,450 jobs. The layoffs are expected to help the company reach its goal of axing costs by $4 billion by 2020 as it tries to grow profits and recover from a series of scandals while operating under the Federal Reserve’s asset cap.
Wells Fargo has also said it will reduce its branch count by about 800 by 2020 as well as sell non-core businesses in an attempt to lower costs and become more efficient. Last month, the bank had laid off 600 employees in its mortgage division which has faced headwinds amid a slowdown in refinancing demand.
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While the bank did not specify which departments or regions would be impacted by the move, it said that the cuts will be made to reflect changing consumer preferences as more customers perform banking tasks using self-service technology.
According to Keefe Bruyette & Woods analyst Brian Kleinhanzl, the layoffs announcement was not a surprise, as the sentiment regarding this matter has been reflected in Wall Street’s muted reaction to the news. The stock rose 0.6 percent to $55.55 during Thursday trading.
“Employee related costs are the largest expense so that was likely where the cuts were coming,” he said. Automation also lowers the need for staffing over time.”
In a statement, the company’s Chief Executive Tim Sloan said, “Wells Fargo takes very seriously any change that involves its team members, and as always, we will be thoughtful and transparent, and treat team members with respect.”
Wells Fargo reported a lower-than-expected quarterly profit in July as lending activity slowed and the bank said much of the decline had to do with moves to avoid riskier loans, Reuters reports.
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