Wells Fargo is engaging in significant cost-cutting, including layoffs, in a bid to become more lean amid the pandemic-induced financial crisis, The Wall Street Journal (WSJ) reported.
The total number of layoffs hasn’t been finalized yet, according to WSJ, but they are expected to be in the tens of millions, although they won’t all happen at the same time. The company had nearly 260,000 employees at the end of 2019.
Wells Fargo is also strengthening rules when it comes to commercial lending, WSJ reported.
Pressures on Wells Fargo include a significant decline in ATM transactions.
CEO Charles W. Scharf on a July 14 conference call related to second-quarter earnings said: “I’ve acknowledged in the past that our expenses are too high and that we’re building road maps to improve our efficiency ratio. To repeat, there is nothing structurally different about Wells Fargo that should prevent us from being as efficient as our large peers, but we are far from it. For us to bring our level of efficiency close to our peers, the math would tell you, we need to eliminate over $10 billion of expenses.”
He added: “While our work is not yet complete to commit to specific numbers and time frames, we expect to take a series of actions, beginning in the second half of the year, to begin to reduce our expense base and bring our expenses in line with the size and composition of our businesses. This will be a multi-year effort for sure, but we’d like to see a reduction in expenses next year.”
Wells Fargo also said earlier this month that it would use proceeds from processing federal COVID-19 relief loans for businesses to set up a fund aimed at helping small — minority-owned, especially — businesses.
To the extent there are upsides from the need of businesses to respond to COVID-19, it may be the accelerated move to digital processes, Wells Fargo Executive Vice President and Head of Merchant Services Colleen Taylor said in early July.