Cost-cutting, layoffs ahead for scandal-plagued Wells Fargo, analyst warns
By John Aidan ByrneFebruary 15, 2020 | 10:10pm
Scandal-plagued Wells Fargo’s road to recovery will be long and painful — marked by cost-cutting and more layoffs than originally forecast.
As much as 10 percent of the bank’s current workforce is facing elimination, an analyst has warned.
The embattled San Francisco-based lender — the nation’s fourth-largest bank by assets — took the first bold steps in a major revamp last week, announcing an overhaul of its corporate structure and reporting lines. It comes as Wells searches for a new head of wealth management, a unit that has scrambled to shore up morale and recruiting with large compensation packages.
Despite the lure of big money, Wells’ adviser ranks have declined to 13,512, plunging by 456 by the end of last year.
“Wells Fargo continues to feel the negative effects of a series of scandals, the most notable being fake account openings, and the latest a class-action suit for deferred compensation,” said Ashley Longabaugh, a senior analyst at Celent. “On the wealth management side, their profits have not changed much since the scandal, while their competitors have seen double-digit growth.”
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Former Wells adviser Zach Abraham, who left to form Tacoma, Washington-based Bulwark Capital Management in 2012, said, “You could not pay me enough to go back to Wells. I think that business will be in terminal decline until something massive changes.”
Meanwhile, investors are being put on notice.
“The turnaround of Wells Fargo is likely to take a minimum of three to five years. There are much better investments. Sell,” said Dick Bove, bank analyst at Odeon Capital Group, in a recent note.
Bove told The Post that up to 20,000 Wells employees — some 10 percent of its total head count — could be dismissed over the next several years.
“It’s not just about firing people, but about getting rid of positions,” Bove said. “The core issue is that Wells kept adding business, territory, divisions and physical facilities, and it never took a closer look — and that’s what’s happening now.”
Wells Fargo had no specific comment for this story.
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