Wells Fargo & Company (WFC - Free Report) plans to cut nearly 1,000 jobs in its consumer lending and payments, and virtual solutions units. The news was first reported by Reuters.
This move is part of the company’s larger workforce reduction plan announced earlier this year. Tim Sloan, the bank’s chief executive officer announced plans of reducing headcount by up to 10% by 2020 in order to streamline operations.
In fact, Tom Goyda, a spokesman for the company informed that these job cuts are part of Wells Fargo’s effort to focus its “business on evolving customer preferences, the accelerating adoption of digital self-service capabilities, and operational excellence and efficiency.”
Notably, the majority of the employees, who are likely to lose their jobs, have received 60-day notices. However, some of those employees, who have only received pre-notices to date, are likely to get a 60-day notice sometime next year.
Of the total cuts, nearly 900 are in Wells Fargo’s home lending unit. It reflects decreases in the total volume of applications as well as the number of customers in default.
While these job cuts are expected to be spread across the entire United States, most of these are likely to be concentrated in Des Moines, IA, as it is expected to witness nearly 400 layoffs. Almost 111 cuts are expected to take place in Fort Mill, SC.
Goyda stated, “We are committed to retaining as many team members as possible and will do everything we can to help them identify other opportunities within Wells Fargo.”
Ultimately, these job cuts will help the bank reach its final goal of eliminating $4 billion of expenses by 2020. Apart from this, in order to become more efficient, the bank plans to reduce its branch count by about 800 by 2020 and sell non-core businesses.
Despite taking cost-saving efforts, Wells Fargo has been facing many challenges. This, in turn, has led to continued rise in expenses over the past few years. Notably, non-interest expenses recorded a five-year (2013-2017) CAGR of 4.6%, with the trend continuing into the first three quarters of 2018 as well.
In fact, the company’s bottom line is expected to continue to be hurt in the near term, primarily due to higher legal expenses related to the sales scam and other litigation issues.
Shares of this Zacks Rank #3 (Hold) company have lost 13% so far this year compared with the industry’s decline of 7.9%.
A few better-ranked stocks from the finance space are E*TRADE Financial Corp. (ETFC - Free Report) , Citigroup Inc. (C - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) .
E*TRADE Financial’s share price has increased nearly 54% in the past two years. For 2018, its earnings estimates have been revised 6.9% upward over the past 60 days. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, Citigroup has witnessed an upward earnings estimate revision of 1.8% for the current year. Its shares have gained 16.5% in the past two years. It currently carries a Zacks Rank #2 (Buy).
Presently, JPMorgan also carries a Zacks Rank of 2. Its earnings estimates for 2018 have been revised 1.4% upward over the past 60 days. Shares of the company have gained 41.1% in the past two years.
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