Wells Fargo plans 5 percent to 10 percent workforce cut that could affect 26,500 positions

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Wells Fargo plans to cut its workforce by 5 percent to 10 percent within the next three years as the embattled U.S. banking giant executes cost-saving efforts and copes with customers switching to digital self-service options.

The decline would involve job displacements as well as normal attrition, CEO Tim Sloan told Wells Fargo employees Thursday in a companywide town hall meeting.

The San Francisco-based bank has roughly 265,000 team members, company records show. Given the estimated personnel headcount, the projected downsizing plan could affect as many as 26,500 Wells Fargo positions under a 10 percent reduction.

Cynthia Sugiyama, a spokeswoman for the bank, confirmed that the calculation was accurate.

The employee meeting was the latest in a series of Wells Fargo meetings about the company’s transformation plans amid increasing competition and the fallout from a scandal over unauthorized accounts.

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Sloan told company employees the downsizing represented a response to “changing customer preferences, including the accelerating adoption of digital self-service capabilities.” He similarly cited an “ongoing commitment to efficiency.”

Additionally, Sloan pledged that the bank would keep employees informed as the workforce downsizing proceeds.

“Wells Fargo takes very seriously any change that involves its team members, and as always, we will be thoughtful and transparent and treat team members with respect,” Sloan said in a formal statement. “We have robust programs to make impacted team members aware of other job opportunities within Wells Fargo and provide support as they transition to the next phase of their careers. And even as we become more efficient, Wells Fargo will remain one of the largest employers in the United States.”

The workforce downsizing “will not have much of an impact on the bank’s bottom line,” predicted Michael Moebs, the CEO of Moebs Services, a research firm for the financial services industry.”

“Tellers will be a huge cut, but their salaries are significantly less than the compensation that will have to be paid to IT (internet technology) employees now and in the future,” added Moebs. “Overall, the Wells Fargo move is good to keep up with competition from Fintech firms.”

Brian Riley, director of credit advisory service at Mercator Advisory Group, said Wells Fargo’s increasing emphasis on digital banking services was “a natural movement,” as the bank re-engineers its business for the future.

“When you look at retail banking, you can handle a lot without going in. You don’t even need to go in to deposit a check,” said Riley. “It costs a lot of money to run a bank branch, and Wells has 6,000 branches while (JPMorgan) Chase has 5,200 and Bank of America 4,500.” 

The planned workforce reduction comes as Wells Fargo tries to regain the confidence of customers and investors following the scandal over the estimated 3.5 million bank accounts and other financial products that may have been opened without customer authorization.

The bank was hit with $185 million in civil penalties in Sept. 2016 as the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and Los Angeles legal officials said Wells Fargo’s retail sales policies and the bank’s managers pushed employees to open as many customer accounts as possible.

The bank subsequently changed its compensation policies and ousted several top executives.

However, Wells Fargo has similarly struggled with additional regulatory actions and fines over its handling of other financial programs that harmed customers.

In April, the bank agreed to pay $1 billion in civil penalties to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency over mortgage and auto loan violations that forced customers to pay extra fees.

And in February, Wells Fargo agreed to a consent order with the Federal Reserve over what the central bank characterized as “consumer abuses and compliance breakdowns.” The agreement restricted Wells Fargo’s growth, even as competitors expanded, and required the bank to replace four of its board members.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

  

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