Below are some points and quotes from Charlie’s remarks on the earnings call (direct quotes from the call transcript)
Please comment and share your thought.
https://www.fool.com/earnings/call-transcripts/2020/07/14/wells-fargo-wfc-q2-2020-earnings-call-transcript.aspx
1) Is the Risk and Regulatory Work safer? Hmmmm... Sort of.
“ We still have much to do to build the right risk and control foundation, which is what our regulators expect, and nothing can or will stand in the way of those activities. It is our highest priority. But we also recognize that we've been extremely inefficient for too long, and we will begin to take decisive actions, none of which will impact our risk and regulatory work, to increase our margins.”
“ As I've said, and I'll say it again, we will not do anything that will impact the work we have under way to build out our risk and control environment. The opportunity to become more efficient exists elsewhere in the organization, and we will protect this work at all costs.”
2) WFC is too inefficient. Agreed.
“ I have acknowledged in the past that our expenses are too high and that we're building road maps to improve our efficiency ratio. To repeat, there is nothing structurally different about Wells Fargo that should prevent us from being as efficient as our large peers, but we are far from it.”
- 1) How bad is it?
“For us to bring our level of efficiency close to our peers, the math would tell you we need to eliminate over $10 billion of expenses.”
“ We have too many management layers, spans of controls for managers are too narrow, and we have resources dedicated to activities that are not a priority today. This cannot continue.”
3) How many layoffs will occur ? When?
“While our work is not yet complete to commit to specific numbers and time frames, we expect to take a series of actions beginning in the second half of the year to begin to reduce our expense base and bring our expenses in line with the size and composition of our businesses.”
“I will continue to share more specifics about our plans as they develop, and we will be talking more about this next quarter.”
4) How long will this process take?
“ This will be a multiyear effort for sure but would like to see a reduction in expenses next year. “
5) How are these decisions being made?
“And we now have a centralized team driving the effort across the enterprise, and our lines of business and functional areas have dedicated resources stacked against this. This work did not start in the last few months, but the extremely challenging operating environment and uncertain outlook has accelerated our sense of urgency.”
6) Will there be other cost reduction actions beyond FTE cuts?
“We also have the opportunity to apply lessons we have learned since the onset of the pandemic to drive efficiency across the company. Over the medium term, we have the opportunity to materially reduce our expense, including increasing digital adoption for retail and commercial clients; reducing third-party spend; consolidating locations, including branches, field offices and corporate sites; and at applying technology differently.”
7) How about diversity? There seems to be pervasive bias at WFC.
“ Wells Fargo has not been effective in creating enough diversity or a consistently inclusive environment, and I've outlined a number of actions we are taking around race to change the outcomes, including creating a new role which will have a broad mandate of driving diversity and inclusion in both the workplace but also our business. We'll be evaluating operating committee members based upon their progress in improving diverse representation and inclusion in their area of responsibility, and it will have a direct impact on year-end compensation decisions. ”