Wells Fargo CFO Expects More Layoffs in Drive for Efficiency

Wells Fargo Chief Financial Officer Mike Santomassimo reportedly said that the bank could make further layoffs as it seeks to improve efficiency.

Since the third quarter of 2020, Wells Fargo has been trimming its workforce, already reducing its employee base by nearly 40,000, Reuters reported Tuesday (Sept. 12).

Santomassimo told the media outlet, “I do think that there’s more to do, and you’ll see that through the headcount number.”

At the end of the June quarter, Wells Fargo had 233,834 employees, compared to 243,674 in the second quarter of the previous year, according to the report. The bank has also made cuts in its mortgage business, which has resulted in some layoffs. Additionally, the commercial real estate business faces pressure, particularly in office loans, as employees working remotely have largely vacated many buildings.

Despite the challenges in office real estate, Santomassimo expressed confidence in the bank’s other portfolios, stating that they are performing well, the report said. While there might be ongoing pressure in the commercial real estate portfolio, it is unlikely to reach the levels seen in previous quarters. In the June quarter, Wells Fargo increased its allowances for credit losses by $949 million to account for potential losses in office loans.

Wells Fargo continues to operate under an asset cap imposed by regulators until it can demonstrate that it has resolved issues stemming from a fake accounts scandal, per the report. The bank still has nine open consent orders from banking regulators that require additional oversight of its practices. Santomassimo did not provide any guidance on when the asset cap might be lifted but assured that the bank has been actively working to address its internal issues.

This news comes a day after it was reported that Barclays Plc plans hundreds of job cuts, following many other financial institutions that have done the same.

Barclays CEO C. S. Venkatakrishnan told CNBC Monday (Sept. 11) that these workforce plans are in line with the broader financial industry. “We always continually modulate modulate and modify that work force,” he told the media outlet.

Observers have attributed the job cuts made in the banking industry in recent months to banks over-hiring during the previous two or three years and managers seeking to reduce costs and maintain a reasonable return.