As expected, WF dividend cut in the news today (6/26/2020), which leads to layoffs:
https://www.cnbc.com/2020/06/29/bank-of-america-citi-and-goldman-keep-dividends-the-same-post-stress-tests-wells-fargo-to-cut.html
8 replies (most recent on top)
With the advent of CCAR, a dividend cut doesn’t mean the same thing. It’s not a last ditch effort, but a preventative measure forced on the banks as a result of the 2008 financial crisis. The FRB gets to approve how banks intend to use their capital because banks are too irresponsible to make their own decisions and pose systemic risks to each other.
WF has a lot of consumer exposure to consumer credit losses more than other banks, these losses may or may not materialize but they have to be reserved. It’s a result of the pandemic adding losses to the stress test scenarios. There will be layoffs, but not really because of this.
Exactly, if you reduce your dividend then you should have more money to pay your employees, so they are not related, they are just the product of being behind their peers, so they have to cut cost to make the numbers look good for regulators. BACs expense ratio is better, but at the end of the day a lot of their employees are miserable. So, what are BAC employees options, go to work at Wells, a company who has a negative light, no, they will stay at BAC where their jobs are secure. Kind of s—s doesn't it. C-ap, that means I need to sell my house before all of those high paying jobs disappear.
Last time dividends were cut was the beginning of the end for Wachovia. Wells came in like the golden child.. Now, they are the red headed stepchild.
me thinks the energy exposure problem and cre exposure problem is MUCH bigger than they are leading investors to believe.
div cut is a confirmation that buybacks last year were selfish and self defeating.
executive team gorged and rewarded themselves a few too many times, and now employees, and shareholders will pay for their stupidity and greed.
Notice they didnt mention how MUCH the cut would be.
Me thinks that dividend is goin to 0.
TIMBERRRRRRRR
WACHOVIA 2.0
Anyone wanna buy a bank? Its gonna be cheap.
Agree with OP. WFC is The Biggest Loser because we are currently the only large bank who has been forced to make the decision to cut dividends, something that every public company strongly resists. It is confirming that we are in a serious weakening financial position given the current and future economic climate. If a company with a rich history of paying dividends cuts their dividend, we have moved in to a stage of desperate measures.
Yes- layoffs were already in the works, should be no doubt there. The question has always been around when and how deep. I’m sure no one cares, but I normally try to be a level-headed non emotional contributor to this board. But I also want to keep it real. Cutting the dividend is a strong statement pointing to the fact that WFC has arrived at a place where last-ditch decisions are being executed NOW. If our executive team is willing to cut the dividend by 60%: the only conclusion I can come to is they are willing to cut this place closer to the bone than I was originally thinking. That’s my take.
Dividend cut was easy to anticipate given growth restrictions (asset cap) and unknown impact of covid
Also helps to navigate the politics and message/provide political air cover for the upcoming 20k layoffs- pain for the investors class and the working class
It's well known that dividend cuts almost always lead to layoffs.
If layoffs were already planned (which they were), the cuts will be even deeper.
OP is 100% correct.
Layoffs were coming anyway. Stop tying it to dividend reduction.