Wells Fargo’s CFO Anticipates Further Workforce Reductions in the Future

Wells Fargo's CFO Anticipates Further

By Jack

September 13, 2023

Wells Fargo's CFO Anticipates Further

Wells Fargo, according to Chief Financial Officer Mike Santomassimo, may continue to reduce its workforce in an effort to enhance efficiency. The bank has been downsizing its employee base since the third quarter of 2020, having already cut nearly 40,000 jobs, and these reductions are expected to persist.

Santomassimo stated, “I believe there is more room for improvement, which will be reflected in our headcount figures.”

As of the end of the June quarter, Wells Fargo had 233,834 employees, compared to 243,674 in the second quarter of the previous year. The bank has also made cuts in its mortgage business, resulting in some layoffs.

The commercial real estate (CRE) sector is experiencing pressure, particularly in office loans. Rising financing costs for buildings largely deserted by remote-working employees have become a significant concern for banks. Santomassimo noted that while there is systemic stress in the office real estate sector, other portfolios are performing well. There may be some ongoing pressure in the CRE portfolio, but it is not expected to reach the levels seen in previous quarters.

During the June quarter, Wells Fargo increased its allowances for credit losses by $949 million to account for potential losses in office loans.

Wells Fargo remains subject to an asset cap, which restricts its growth until regulators determine that it has resolved issues stemming from a fake accounts scandal. The bank still has nine outstanding consent orders from banking regulators, requiring additional oversight of its operations.

Santomassimo did not offer guidance on when the asset cap might be lifted but mentioned that the bank has been actively addressing its internal challenges.

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