Wells Fargo to cut up to 26,500 jobs within three years

NEW YORK: Wells Fargo announced plans Thursday to cut five to 10 per cent of its workforce, a move that would affect up to 26,500 jobs based on current headcount.

The bank, which has struggled to regain its footing following a series of scandals, said the job cuts and attrition would make the company more efficient at a time when more customers are banking on digital platforms.

“We are continuing to transform Wells Fargo to deliver what customers want” which includes “evolving our business model to meet those needs in a more streamlined and efficient manner,” Sloan said.

He said the bank will support laid off workers including pointing them towards other posts within Wells Fargo.

Large banks have been closing branches amid the increasing shift to online banking. In July, Wells Fargo, which is a major player in mortgages in the US where most of its business is based, said it planned to close 300 offices in 2018, in addition to divestitures of 52 branches in four Midwestern states.

In the second quarter, the bank experienced a five per cent drop in teller and ATM transactions, while digital sessions increased 17 per cent from the year-ago period, executives said in July.

Wells Fargo also has been stymied by a series of scandals, especially revelations in 2016 that the company opened millions of phony deposit accounts and lines of credit without clients’ knowledge as part of high-pressure retail sales tactics.

Since that scandal, the bank has replaced its chief executive, revamped its payment incentive system and added staff to oversee governance.

However, some of these measures have added to costs, denting Wells Fargo profit margins compared with other large banks. The bank reported a drop in overall loans and deposits in the second quarter.

Following the announcement, shares of Wells Fargo rose 0.7 per cent to US$55.60 in afternoon trading.