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Wells Fargo (WFC) Eyes Operational Efficiency With Job Cuts
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At an investor conference, Wells Fargo & Company’s (WFC - Free Report) chief financial officer, Mike Santomassimo, noted that the company is eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
“We continue to believe we’ve got a lot more to do to make the company as efficient as it should be,” Santomassimo remarked at the Barclays Global Financial Services Conference.
Since third-quarter 2020, the bank has cut almost 40,000 jobs. Santomassimo noted, “We had too much real estate before Covid, and so we’ve been methodically working through that portfolio over the last few years.”
With the macroeconomic uncertainty, banks’ exposure to commercial real estate loans has been worrisome, particularly in office loans, due to slow return to office. Wells Fargo's management noted that its portfolios other than office lending have been performing well, reducing the pressure in its commercial real estate portfolio.
WFC also remarked that quarter to date, loans have dipped slightly and the company has stepped back from auto originations. With the asset cap remaining in place until it complies fully with regulators’ demands regarding compliance and operational risk management, Wells Fargo’s loan balance is not likely to improve much. This is likely to hamper net interest income growth.
Nonetheless, the company has continued its share repurchase activity in the third quarter, although at a slower pace than in the first half of 2023.The company enjoys a strong liquidity position, with a liquidity coverage ratio of 123% as of the second-quarter 2023 end, which has been above its regulatory minimum of 100%. Its liquid assets (including cash and due from banks, as well as interest-earning deposits with banks) totaled $155.33 billion as of the same date. This has likely driven capital-deployment activity.
Wells Fargo’s shares have gained 8.8% over the past six months compared with the industry’s growth of 5%.
Similar to WFC, The Goldman Sachs Group, Inc. (GS - Free Report) and Barclays PLC (BCS - Free Report) have been reducing their workforces.
GS is planning another wave of job cuts that could take place as soon as next month, per a Financial Times article. This is part of its yearly practice of letting go of those employees who are deemed to be the lowest performers.
The expected move usually affects 1-5% of GS’s total staff. The company is aiming to cut jobs at the lower end of the range, primarily in its main business divisions like investment banking (IB) and trading.
Per a Bloomberg report, Barclaysintends to eliminate hundreds of jobs across its trading and IB divisions, while separately, Reuters reported that BCS is considering trimming 400 jobs in its retail banking business as part of its broader strategic review.
Persons familiar with the matter noted that Barclays plans to eliminate 5% of its client-facing employees in the trading business, along with a number of dealmakers globally, and restructure teams within its U.K. consumer-banking business.
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Wells Fargo (WFC) Eyes Operational Efficiency With Job Cuts
At an investor conference, Wells Fargo & Company’s (WFC - Free Report) chief financial officer, Mike Santomassimo, noted that the company is eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
“We continue to believe we’ve got a lot more to do to make the company as efficient as it should be,” Santomassimo remarked at the Barclays Global Financial Services Conference.
Since third-quarter 2020, the bank has cut almost 40,000 jobs. Santomassimo noted, “We had too much real estate before Covid, and so we’ve been methodically working through that portfolio over the last few years.”
With the macroeconomic uncertainty, banks’ exposure to commercial real estate loans has been worrisome, particularly in office loans, due to slow return to office. Wells Fargo's management noted that its portfolios other than office lending have been performing well, reducing the pressure in its commercial real estate portfolio.
WFC also remarked that quarter to date, loans have dipped slightly and the company has stepped back from auto originations. With the asset cap remaining in place until it complies fully with regulators’ demands regarding compliance and operational risk management, Wells Fargo’s loan balance is not likely to improve much. This is likely to hamper net interest income growth.
Nonetheless, the company has continued its share repurchase activity in the third quarter, although at a slower pace than in the first half of 2023.The company enjoys a strong liquidity position, with a liquidity coverage ratio of 123% as of the second-quarter 2023 end, which has been above its regulatory minimum of 100%. Its liquid assets (including cash and due from banks, as well as interest-earning deposits with banks) totaled $155.33 billion as of the same date. This has likely driven capital-deployment activity.
Wells Fargo’s shares have gained 8.8% over the past six months compared with the industry’s growth of 5%.
Image Source: Zacks Investment Research
WFC presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Similar to WFC, The Goldman Sachs Group, Inc. (GS - Free Report) and Barclays PLC (BCS - Free Report) have been reducing their workforces.
GS is planning another wave of job cuts that could take place as soon as next month, per a Financial Times article. This is part of its yearly practice of letting go of those employees who are deemed to be the lowest performers.
The expected move usually affects 1-5% of GS’s total staff. The company is aiming to cut jobs at the lower end of the range, primarily in its main business divisions like investment banking (IB) and trading.
Per a Bloomberg report, Barclaysintends to eliminate hundreds of jobs across its trading and IB divisions, while separately, Reuters reported that BCS is considering trimming 400 jobs in its retail banking business as part of its broader strategic review.
Persons familiar with the matter noted that Barclays plans to eliminate 5% of its client-facing employees in the trading business, along with a number of dealmakers globally, and restructure teams within its U.K. consumer-banking business.