Wells Fargo Job Cuts Could Cost Bank Nearly $1 Billion

Wells Fargo will reportedly incur greater-than-expected expenses from severances tied to recent job cuts.

The price tag for those layoffs could come to between $750 million and just shy of $1 billion for the banking giant’s fourth quarter, CEO Charlie Scharf said Tuesday (Dec. 5) at the Goldman Sachs U.S. Financial Services Conference.

“We are continuing to focus on efficiency with turnover dropping, unfortunately, we’re going to have to be more aggressive about our own internal actions,” said Scharf, whose comments were reported by Reuters.

He also said that this would be the right move in the long run.

The report notes that Wells Fargo last month let go of just under 50 workers from its corporate and investment banking business, and had warned it could cut additional jobs as it strives to boost efficiency.

As of October, Wells Fargo and several of America’s other biggest banks had cut 20,000 jobs as the financial world deals with the continuing pressure of interest rates on the mortgage sector.

The news comes days after a report that former Wells Fargo CEO Tim Sloan has sued the bank to recoup more than $34 million in unpaid compensation.

Sloan alleged that Wells Fargo unlawfully held back his deferred pay and bonus after he stepped down as CEO in 2019.

During Sloan’s 18 months as chief executive, Wells Fargo faced multiple scandals and regulatory penalties that culminated in a Federal Reserve-imposed growth cap.

However, Sloan argues in his suit that these issues began before he became CEO and that he worked hard to fix things. He said Wells Fargo’s board did not blame him until they were facing criticism following his departure.

Meanwhile, Scharf and other bank CEOs are scheduled to appear before the Senate Banking Committee Wednesday (Dec. 6) to protest new regulations and capital hikes, saying these measures will hinder the economy.

As noted here earlier this week, these executives hope to convince lawmakers that these regulations could hurt lending, which in turn would hurt small businesses and consumers.

The CEOS are expected to focus their arguments on the “Basel Endgame” proposal, which is aimed at revamping how banks calculate their loss-absorbing capital. The industry has instituted a campaign against this proposal, contending it could stifle lending and hinder economic growth.