Wells Fargo & Co. plans to scale back on office space and headcount as part of the company’s ongoing downsizing efforts.
Wells Fargo is weighing additional layoffs, branch closings, and other cost-cutting measures as a way to shore up its balance sheet ahead of a possible U.S. recession next year, per reporting by the Dallas Business Journal.
“This company is not efficient — like period, end of story,” Wells Fargo CEO Charlie Scharf said on the company’s latest earnings call. “Even with all of the reductions that we’ve made, it’s not surprising because as you peel the onion back, other things present themselves.”
The San Francisco-based financial institution has already slashed its headcount by nearly 50,000 workers and reduced the number of regional branches by 6% over the last three years. However, according to Scharf, those expense-cutting efforts were not enough to make a meaningful impact.
“If we had stood here and told you we were going to drive the headcount down that much in this period of time, I’m not sure you’d have believed us. So, when we say we’re going to do something, we really do mean it,” he declared.
Despite shedding a large portion of its employee base, CFO Mike Santomassimo said during the earnings call that he sees room for more layoffs and company optimizations.
“We believe we still have additional opportunities to reduce headcount and attrition has remained low, which will likely result in additional severance expense for actions in 2024,” Santomassimo said. Ultimately, there are “very few parts of the company” that will be spared from cuts, he warned.
While Wells Fargo has made the deepest workforce cuts of the Wall Street banks, it is not the only financial institution scaling back headcount in preparation for an economic downturn in early 2024.
With uncertainty surrounding an upcoming recession growing and defaults on corporate and consumer loans rising, banks are cutting costs wherever they can, according to Chris Marinac, research director at Janney Montgomery Scott, a Grapevine-based financial institution.
“They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad,” he said, per CNBC. “By the time we roll into January, you’ll hear a lot of companies talking about this.”
Other banks that intend to shrink their workforce include Goldman Sachs, which plans to cut between 1% and 5% of its staff, and Citigroup, which plans to target upper-level management jobs as part of its downsizing.
Bank of America, which has cut more than 4,000 jobs since the start of 2023, expects staffing levels to stay flat through the end of the year.
The Dallas Express reached out to Wells Fargo for comment but did not receive a response by the time of publishing.
