Covid-19, negative Q2 earnings force Wells Fargo, major banks to cut jobs in US
Aderemi Ojekunle is a Businessamlive Reporter.
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Charles Abuede
Wells Fargo, the largest employer in the US banking industry, is laying off 700 positions from the bank as it gets set to refocus on its consumer-banking strength, such as mortgages, amidst low-interest rates and growing real estate market.
This is coming roughly one week after the financial institution and a handful of other Wall Street banks revealed their plans to resurrect layoffs now that their coronavirus-inspired moratoriums had come to an end.
The San Francisco-based banking corporation, which is best known in recent years for botching retail customers and small business refi loans, is reported to have announced the first 700 layoffs in a scheme that will, in the long run, gather tens of thousands of jobs. The bank also revealed that the layoffs will impact business lines across its commercial banking division with at least $5 million in sales annually.
Notes made by analysts on the announced layoffs revealed that Wells Fargo is under intense pressure to spend less after it slashed its dividend by 80 per cent, following that Q2 earnings sank deep into the red, though they said, “that Wells was the first US megabank to announce plans to re-start layoffs is hardly surprising.”
As though the coronavirus nauseated economy and low loan costs weren’t sufficient, Wells is as yet working with the albatross of a Federal Reserve cap on balance sheet growth.
According to Wells’ spokeswoman, who commented on the issue on Wednesday, “To be sure, not all of CEO Charlie Scharf’s projected cost-savings will come from layoffs: the bank expects to reduce the size of our workforce through a combination of attrition, the elimination of open roles and job displacements.
“We are at the beginning of a multiyear effort to build a stronger, more efficient company for our customers, employees, communities and shareholders. As part of this work, we will have impacts, including job reductions, in nearly all of our functions and business lines, including commercial banking, where we have started displacements,” she concluded.
The spokeswoman further stated that while Wells’ cutbacks presumably look enormous compared with its American companions, two European financial giants – Deutsche Bank and HSBC – at present have it beat, with the two banks arranging gigantic headcount decreases that will add up to the greatest financial services phlebotomy since the previous CEO.