Roughly one week after Wells Fargo and a handful of other Wall Street banks announced plans to re-start layoffs now that their coronavirus-inspired (and, in some cases, PPP-inspired) moratoriums had come to an end, the San Francisco-based bank best known in recent years for scamming retail customers and botching small business refi loans has announced the first 700 layoffs in a scheme that will eventually cull tens of thousands of jobs.
According to Bloomberg, Wells is cutting 700 positions from its commercial-banking unit. The bank said the cuts will impact business lines across the division. The commercial banking division typically services businesses with at least $5 million in annual sales, according to a company spokeswoman.
That would suggest that Wells Fargo is cutting back more on the commercial banking side as it re-focuses on its consumer-banking strengths, like mortgages, amid a booming housing market and rock-bottom interest rates.
Wells Fargo has long been the US banking industry’s largest employer, given its domestic, retail-oriented focus, and traditional dominance west of the Mississippi.
That Wells was the first US megabank to announce plans to re-start layoffs is hardly surprising: As Bloomberg notes, the bank is under enormous pressure to spend less after slashing its dividend by 80% after Q2 earnings sank deep into the red.
As if the coronavirus-sickened economy and low interest rates weren’t enough, Wells is still operating with the albatross of a Federal Reserve cap on balance sheet growth (which had to be eased earlier this year so the bank could participate in the ‘Paycheck Protection Program’).
To be sure, not all of CEO Charlie Scharf’s projected cost-savings will come from layoffs: the bank expects “to reduce the size of our workforce through a combination of attrition, the elimination of open roles and job displacements,” one Wells spokeswoman told Bloomberg.
“We are at the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities and shareholders,” Ellis said in a statement. “As part of this work, we will have impacts, including job reductions, in nearly all of our functions and business lines, including commercial banking, where we have started displacements.”
While Wells’ layoffs probably look huge compared to its American peers, two European banking giants – Deutsche Bank and HSBC – currently have it beat, with both banks planning massive head count reductions that amount to the biggest financial services bloodletting since Lehman.