Wells Fargo cuts 700 commercial banking jobs in first slew of layoffs (2024)

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Wells Fargo cuts 700 commercial banking jobs in first slew of layoffs? ›

Wells Fargo has cut more than 700 commercial banking jobs as part of workforce reductions that could ultimately impact 'tens of thousands' of staff, according to a new report.

The decision to reduce headcount comes in the wake of Wells Fargo's ongoing efforts to navigate challenges in the economic landscape. Last month, Scharf highlighted the necessity of these payments, citing the need for the company to adjust its workforce amid persistently low turnover rates.

Bank of America, the country's largest bank by assets, is laying off people ranging from junior analysts to managing directors, Bloomberg News said without naming its sources.

As dealmaking dried up and demand from borrowers softened last year, banks laid off employees or stopped replacing those who left. JPMorgan Chase (JPM. N) , opens new tab, the nation's largest lender, bucked the trend by bolstering its ranks for a third straight year.

Wells Fargo's severance packages typically run from six weeks of pay to as long as 16 months, depending on the employee's length of service. The people affected are those whose jobs have been cut as part of Wells Fargo's regular business adjustments.

More than 16 million accounts at Wells Fargo were subject to their illegal practices, including misapplied payments, wrongful foreclosures, and incorrect fees and interest charges.

Following significant workforce reductions in 2022 and 2023, this year has already seen 60,000 job cuts across 254 companies, according to independent layoffs tracker Layoffs.fyi. Companies like Tesla, Amazon, Google, TikTok, Snap and Microsoft have conducted sizable layoffs in the first months of 2024.

"The long-term trend of shrinking branch numbers will continue as banks embrace technology and mobile banking," Jacob Thompson, managing director at Samco Capital Markets, said in a recent interview. There were about 77,500 bank branches in the U.S. at the close of 2023, according to updated estimates from S&P Global.

The big picture: Big banks were among the first to call workers back into the office in 2021, when government social distancing restrictions eased. Now, with major layoffs in the financial sector due to higher interest rates, banks are getting even more forceful.

“The closer your job is to the most profitable activities of the company, the lower your risk of layoff,” he writes. He then adds that people who belong to teams like human resources and finance are less likely to be impacted.

Who is most at risk for layoffs? ›

The workers who feel most at-risk include those in product management, quality assurance, marketing, finance, and IT roles.

Morgan Stanley

The bank plans to cut hundreds of jobs in its wealth-management division, according to people familiar with the matter. The layoffs are expected to hit less than 1% of the wealth unit's employees, which number less than 40,000.

Until the sales-account scandal erupted in September 2016, Wells Fargo enjoyed a sterling reputation. The first complaint and fine came from the Consumer Financial Protection Bureau, which found “widespread illegal” sales practices including the opening millions of accounts without customers' knowledge.

Wells Fargo's likelihood of distress is under 9% at this time. It has tiny risk of undergoing some form of financial distress in the near future. Probability of bankruptcy shows the probability of financial torment over the next two years of operations under current economic and market conditions.

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Shares of Wells Fargo, up 15% this year through Thursday, were down 1.3% at 9:38 a.m. in New York trading. Wells Fargo attributed the decline in first-quarter NII to the impact of higher interest rates on funding costs, including customers moving their money to higher-yielding accounts, as well as lower loan balances.