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Wells Fargo boss warns of $1 billion severance costs as layoffs loom
https://www.whatjobs.com/news/usa/us-business-news/wells-fargo-boss-warns-of-1-billion-severance-costs-as-layoffs-loom
By Nithya Bose in US business news, posted December 6, 2023
Wells Fargo CEO Charlie Scharf has said that low staff turnover will cause the bank to incur a large severance expense in the fourth quarter.
Mr Scharf told investors during a Goldman Sachs conference in New York: “We’re looking at something like $750 million to a little less than a billion dollars of severance in the fourth quarter that we weren’t anticipating, just because we want to continue to focus on efficiency.”
This sizable expense is an accrual for future worker layoffs projected for the upcoming year.
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However, Wells Fargo has not disclosed the exact number of jobs affected.
The bank, ranked the fourth-largest US bank by assets, has already been actively reducing its workforce.
11,300 jobs cut in 2023
It shed approximately 11,300 jobs in 2023, constituting 4.7 percent of its 227,363 employees as of September.
Scharf said Wells Fargo needed to adopt a more assertive approach to manage headcount efficiently.
He said it’s mainly in light of the reduced attrition observed in the current year.
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Industry leaders, including Scharf and Morgan Stanley CEO James Gorman, have acknowledged concerns about an overinflated workforce.
It’s primarily due to the industry's reluctance to trim jobs amid rising funding costs, a prolonged downturn in Wall Street deals, and worries about potential loan losses.
Scharf outlined the bank's dual strategy of achieving greater efficiency while concurrently investing in revenue-generating areas such as credit cards and capital markets.
He indicated that Wells Fargo is far from reaching its efficiency goals and plans to consolidate employees near the bank's office hubs.
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Despite the cautious approach to managing costs and headcount, Scharf expressed optimism about the overall resilience of both consumers and businesses.
He suggested a "closer to a soft landing" scenario for the US economy in the coming year.
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