Around 30,000 US based employees in total - these jobs will not be eliminated - they will just be shifted to India.
"If we don’t see net improvements in performance of the company, we’ve got the ability to ratchet back the discretionary spend" - he means bonuses and pay raises.
Wells Fargo told investors Friday that it expects to cut expenses by an additional $3.2 billion this year after already trimming about $7.5 billion over the past two years.
“We still have higher headcount and higher expenses than people who are more complex than us,” CEO Charlie Scharf said in discussing on Friday’s earnings call how Wells (NYSE: WFC) stacks up against other large banks. He said some of the bank’s higher expenses and headcount are due to the work it is doing to improve internal risk controls, fallout from the bank's multiple scandals of several years ago.
“But there’s a lot more beyond that. That’s the work that we’re doing to peel that back piece by piece by piece,” Scharf said. “We still have a huge amount of manual processes inside the company. We have duplicate systems.”
While cutting expenses through operating more efficiently, Wells expects 2023’s total expenses, excluding those primarily tied to regulatory issues, to be essentially flat with 2022 expenses. The bank continues to spend on technology and other infrastructure, but even there it plans to spend prudently.
“We’re not going to spend under any environment at all costs. That’s not the way we’re thinking about it,” Scharf said. “If we don’t see net improvements in performance of the company, we’ve got the ability to ratchet back the discretionary spend, so that we do continue to see improved performance.
“That’s the framework that we’re using to make the decisions,” Scharf added.
Since joining Wells Fargo in October 2019, Scharf has been leading the San Francisco-based bank in an effort to boost risk controls and address regulatory issues following scandals that began coming to light in 2016.
One of the bank’s latest moves to improve performance was this week’s announcement that it will no longer buy loans made by third-party lenders and “significantly” shrink its mortgage-servicing portfolio through asset sales. The bank will focus on making mortgages to existing customers, as well as borrowers from minority communities.
“We’re not interested in running and having a business which is focused on a standalone mortgage product,” Scharf told investors Friday. “We very much appreciate the importance of mortgage to the consumer base. We’re going to continue to stay in the business, but we’re going to view it as part of the importance in the broader relationship.”
Other cost-cutting measures at Wells included last year’s closing of 179 branches and cutting branch staff by 10%.
“We continue to focus on branch rationalization as digital adoption and usage among our customers have steadily increased,” said Mike Santomassimo, Wells Fargo’s chief financial officer. “We expect to continue to optimize our branches and staffing levels in response to changing customer needs.”