Wells Fargo Announces Plan to Layoff About 1,000 Of Its Employees in The US
The financial services company, Wells Fargo & Co, recently announced that it already informed nearly a thousand employees in the company’s Virtual Solutions, Innovations and Consumer Lending and Payment groups of its plans to cut out their positions. A considerable number of the employees affected have already gotten 60-day notices. Others have also gotten pre-notices implying that they will also be served 60-day notices in 2019.
The bank reportedly laid off about 600 members of staff in the mortgage division. According to sources, the division had been facing difficulties as a result of refinancing slowdown.
According to a spokesman of the bank, Tom Godya, the planned layoffs follow from the previously announced plans by the bank that it was planning to reduce its total workforce by about 5 percent to 10 percent all across the country. That implies that there might be the elimination of 26,500 jobs in the bank between now and 2020. As of September 30th, Wells Fargo, which is ranked fourth among US banks based on assets, had approximately 262,000 employees.
It announced that it planned to reduce its total headcount so it could reflect the true position that consumer preferences are changing. According to them, more customers now make use of self-service technology to carry out their banking needs.
Nearly nine hundred of the planned layoffs are in its home lending unit. That stood as a reflection of declines in the application volume as well as the percentage of customers who are in default. The layoffs are expected to spread through its branches in the US. However, the concentration will be on Des Moines in Iowa which would have nearly 400 cuts. Also, Fort Mill, South Carolina is expected to have about 111 cuts.
Godya said that the bank is committed to keeping as many employees as it can. He added that Wells Fargo intends to do all that is possible to help these people identify any other suitable opportunity within the bank.
Wells Fargo has nearly 14,000 employees in Des Moines area which makes the bank the largest private employer in the area. Des Moines which is the capital city of Iowa houses Wells Fargo’s division of home mortgage and also has the bank’s 3rd largest number of workers.
Steve Carlson, the local bank spokesperson, stated that the losses would come from normal attrition and layoffs. He, however, did not state whether the announcement on Thursday would put a stop to losses in the capital city. Carlson wrote that they do not have access to any detailed breakdown. Also, he added that they were unable to make any comment on the impact it would have on any job type, geography or business unit.
Reasons for Layoff
The major intention behind the cut is to enable the bank to attain its goal of cost reduction by $4 billion within the next three years as it keeps taking steps to help increase its profits. The bank is also trying to recover from different scandals while it carries out its operation under the asset cap of the Federal Reserve.
In addition to the reduction of headcount, the bank has plans to reduce costs and also increase efficiency by reducing branch count by nearly 800 before the end of 2020. It also plans to reduce cost through the sale of noncore businesses.
Carlson said the decision was a difficult one and the bank made it after a careful consideration. He added that it wasn’t a reflection of the performance or quality of those who would be laid off. He also stressed how each member of the team that is affected by the changes have contributed to the success of the bank’s business.
Experts have opined that the layoffs are more of a reflection of the bank’s mistakes than the economy’s weaknesses. According to an economist of Iowa State University, Peter Orazem, there were some major blunders on the part of Wells Fargo in the aspect of the bank’s corporate governance which caused them to incur heavy costs.
However, at the moment, the employees are the ones who have to pay for the decision of the bank even though they had no direct involvement with it.
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