Wells Fargo’s 10 Percent Employee Reduction Will Affect About 26,000 Employees

It’s official, Wells Fargo & Co is having financial constraints. As a matter of fact, on Thursday last week, the company notified about 1000 employees based in the Innovations, Virtual Solutions, and Consumer Lending and Payments departments that it plans to scrap their positions.

Indeed, the layoffs are on par with the bank’s initial announcement that it plans to trim its headcount by at least 10 percent before 2020, as communicated by the bank’s spokesman, Tom Goyda.

Reduction Estimated to Be About 26,000 Employees

Wells Fargo, which also happens to be the no 4. Based U.S bank in terms of assets, recorded about 262,000 employees as of 30^th September.

Indeed, for the ones that will be affected, they have already received a 60-day notice. Nevertheless, there are others that have received pre-notices, which means they will have a 60-day notice sometime in 2019.

Moreover, roughly 900 of the 1000 layoffs were part of the home lending unit department, showing the declines that this section has had in terms of the numbers of new applicants as well as the number of customers defaulting.

Additionally, the aforementioned cuts will be spread throughout the whole country, though the cuts will be concentrated primarily in Iowa (Des Moines) which is anticipated to have roughly 400 reductions.

Moreover, the likes of Fort Mill based in South Carolina is expected to have roughly 111 cuts.

Wells Fargo poised to make 26,000 employee reductions by 2020

Moving Towards the Future

In a press statement, Goyda revealed that the company is further committed to ensuring as many team members are retained, and that they will do everything humanly possible to identify alternative opportunities in Wells Fargo.

Additionally, the company also announced earlier this year that it would minimize its current headcount by over 26,000 in the three years to come to emulate the shifting dynamics of consumer preferences as more customers are relying on self-service apps and programs to execute their banking.

In fact, the cuts are geared towards helping the bank achieve its goal to cut down spending by about $4 billion by 2020 as it aims to raise its profit margins and bounce back from the series of scandals that it experienced as it operated in tandem with the Federal Reserve asset cap.

That being said, the company has vowed to help team members transition despite its previous scandals

Divisions Having Challenges

Moreover, during the summer period, the bank laid off about 600 employees that were situated in its mortgage division which had numerous challenges that were as a result of its slowdown in refinancing demand.

Apart from headcount reductions, Wells Fargo has also endeared to minimize costs as well as increasing efficiency by hoping to minimize its branches to roughly 800 by 2020.

Indeed, CEO Tim Sloan had initially informed Wells Fargo employees that the minimization would affect normal attrition as well as job displacements.

Additionally, Sloan also informed company employees that the reduction would also be a direct response to a change in customer preferences due to the digital self-service reliance that has been adopted frequently today.

In his press statement, Sloan said that the bank was committed to keeping employees in the know as the reduction process kicked off.

He also reiterated the seriousness in which the company takes towards the exercise that will involve its team members, and vows to be transparent and handle the team members with a lot of respect.

Tim Sloan, CEO of Wells Fargo, has said that the cuts will be part of the transition to digital services by the bank

Assisting Team Members Transition

Additionally, he also said that the program will also work to ensure that the team members that will be affected by the reduction, will be made aware of potential job opportunities within the company and provide additional support to help them transition to the subsequent stage in their careers.

That being said, CEO of Moebs Services, Michael Moebs, which is a research firm that dabbles in the financial service sector, has predicted that the company’s downsizing will not have as much of an effect on the bank’s bottom line as most analysts have predicted.

Indeed, Moebs believes that despite tellers being a massive cut, their salaries will not have a major impact as compared to the compensation that will have to be directed towards IT employees that will be part of the reduction.

That being said, Moebs also believes that the reduction move by Wells Fargo is a great step to keeping at par with the competition from companies such as Fintech.

Conclusively, director if credit advisory, Brian Riley, at Mercator Advisory Groups, comments saying that Wells Fargo is making a comprehensive move to target digital banking services.