Wells Fargo (WFC) Prepares to Cut Jobs Amid Coronavirus Woes

At a time when major U.S. banks have paused cutting jobs, it seems Wells Fargo WFC is taking a different route. Per a Bloomberg Law report, the bank is planning to cut thousands of jobs starting later this year.

Wells Fargo, which has been witnessing a significant rise in operating expenses since the revelation of sales scandal in 2016, hasn’t undertaken any large-scale job cut over the past decade. Now, with increasing pressure to soar up financials amid coronavirus concerns, the bank intends to shrink its workforce. As of Mar 31, 2020, it had approximately 263,000 employees.

The company’s CEO Charlie Scharf has already raised concerns over costs, stating “our expenses are way too high”, during an investor conference in May. Nonetheless, the discussions related to cutting jobs are still at a nascent stage and management is unlikely to reveal the details when it comes out with second-quarter 2020 results on Jul 14.

Since joining in October 2019, Scharf has been reviewing the company’s businesses. He has been developing strategies that are expected to include some reductions in workforce. He intends to disclose the road map for the future by the end of this year.

Moreover, CFO John Shrewsberry provided a hint of what’s likely to happen this year, as part of restructuring efforts. At an investors conference last month, he said, “There will come a time, and I assume at some point this year, when we get back to executing on programs that are in place, and some that are still under development, that are designed to get our total expense base, which for us means our total headcount, to as lean a state as we can responsibly operate.”

This Zacks Rank #3 (Hold) company, which is facing difficulty in operating normally as the Federal Reserve has put a cap on its total assets, will announce a dividend cut when it reports second-quarter results.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past few months, Wells Fargo has moved away from several businesses including student lending, home equity loans, jumbo loan refinancing and independent auto dealerships.

However, investors don’t seem to be happy with these initiatives. The company’s shares have plunged 55.3% so far this year. This is way below other big banks such as JPMorgan JPM, Bank of America BAC and Citigroup C. Also, it is below the industry’s decline of 37.4% over the same time frame.

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