Wells Fargo Plans Layoffs - Analyst Blog
November 22 2011 - 3:30AM
Zacks
Wells Fargo &
Company (WFC) is mulling over retrenching technology and
operations workers as part of its cost containment measures,
according to Reuters. The company will take this
initiative with an aim to reduce about $1.5 billion quarterly
operating expenses.
Moreover, according to sources, the
bank is planning to layoff approximately 25 staff and removed 30
unfilled positions. Wells Fargo plans to reduce quarterly expenses
for technology and staff by $188 million, and therefore more number
of headcounts can be reduced in this area.
The ongoing Project Compass, the
efficiency program of Wells Fargo, which was initiated at the end
of 2010, aims at eliminating jobs to reduce expenses. Under the
project, Wells Fargo targets to trim down quarterly expenses to $11
billion in the fourth quarter of 2012 from $11.7 billion in the
third quarter of 2011. Apart from reducing jobs, the company plans
to achieve its target through loss alleviation and foreclosing
assets. These initiatives will be executed in the upcoming
quarters.
Wells Fargo remains committed to
expense management, but not at the cost of any negative impact on
its revenue. Project Compass is a company-wide initiative focused
on removing unnecessary complexity while eliminating duplication as
a way to improve the customer experience along with the work
process of its team members.
Previously also, Wells Fargo has
cut 49 jobs in its financial card collections department in Sioux
Falls. In January 2011, Wells Fargo also announced to trim 120
workers in its student loan operations, including many in Sioux
Falls, though the company planned to transfer most of the employees
to other units.
In March 2011, Wells Fargo declared
that it will lay off approximately 200 employees, including 82
employees in San Antonio, 30 in Addison and 67 in Bedford, Texas in
its home mortgage division. Wells Fargo employs about 13,000 people
in metro Des Moines. The company’s Home Mortgage division, which is
based in West Des Moines, captures approximately 25% of the U.S.
home lending market. Wells Fargo also announced the elimination of
68 positions at a Vancouver call center, which supports collection
of loans for Wells Fargo Financial division.
Many large Wall Street banks have
started reducing their workforces to cut costs following the
slowdown in economic and market activity. Further, some large Wall
Street banks are laying off employees due to weak trading volumes
and stringent regulations on some parts of their business.
Wells Fargo is not the only
institution doing this dirty job of rendering so many jobless.
Among other U.S. banks, last week, Citigroup Inc.
(C) planned to layoff 3,000 workers as part of its cost containment
measures. Citi plans to slash 900 jobs from its securities and
banking division. The move came on the back of turmoil in equity
and debt markets.
In September, Bank of
America Corp. (BAC) planed to retrench 40,000 workers
under the first phase of a proposed restructuring program for
recovering its financial position. Moreover, in August,
Bank of New York Mellon Corp (BK) stated that it
will slash about 1,500 jobs, which represents about 3% of its total
workforce. State Street Corp. (STT) also intends
to let go 850 technology jobs through layoffs and outsourcing.
Some European banks, failing to
withstand the adverse economic outlook, are slashing jobs too.
UBS AG (UBS) has announced its plans to cut 3,500
headcounts and Credit Suisse
Group (CS) stated that it would layoff 1,500
investment banking persons this month.
While the layoff story is doing
rounds once again, raising the recession alarm and spreading panic
among the corporate clan, some good news came from another banking
giant, in September. The investment banking Chief Executive of
JPMorgan Chase & Co. (JPM) announced that the
company has no plans to retrench employees in the near future.
Overall, until revenue generation
revives, a hideous cost-to-income ratio will continue to force many
more banks to reduce costs through job cuts as they need to
maximize profits in order to boost capital ratios. Of course,
everyone will now keep their eyes on the weak performing firms that
have not yet announced job cuts.
Wells Fargo currently retains its
Zacks #3 Rank, which translates into a short-term ‘Hold’
rating.
BANK OF AMER CP (BAC): Free Stock Analysis Report
BANK OF NY MELL (BK): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CREDIT SUISSE (CS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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