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Wells Fargo CEO Charlie Scharf speaks during the Milken Institute Global Conference on May 2, 2023 in Beverly Hills, California. Speaks during the Milken Institute Global Conference on May 2, 2023 in Beverly Hills, California.
Patrick T. Fallon | AFP | getty images
Wells Fargo CEO Charlie Scharf said Tuesday that low staff turnover means the company will book a massive severance expense in the fourth quarter.
“We’re expecting a $750 million to a little less than a billion dollar cut in the fourth quarter, which we weren’t expecting, just because we want to continue to focus on efficiency,” Scharff told investors. Are.” Goldman Sachs Conference in New York.
According to a bank spokesperson, the expense accrues for employee layoffs that Wells Fargo expects to make next year. The company declined to say how many jobs it would cut.
Scharff said Wells Fargo needs to be “more aggressive” in managing its workforce as attrition has slowed this year.
Wall Street leaders including Scharf and Morgan Stanley CEO James Gorman has said he is fed up with the unusually low attrition rate among his employees. The industry has been cutting jobs since last year as it grapples with rising funding costs, a prolonged slowdown in Wall Street deals and concerns over loan losses.
Wells Fargo, the fourth-largest U.S. bank by assets, was already the most aggressive in laying off employees this year, in part due to its retrenchment from the mortgage sector. The bank has cut about 11,300 jobs, or 4.7% of its workforce, so far in 2023, and it had 227,363 employees as of September.
During the call, Scharf talked about the need to both be more efficient while continuing to invest in revenue-generating areas including credit cards and capital markets.
Scharf said the bank is “not even close” to where it should be in terms of efficiency.
Under the previous leadership, employees had gone on strike across the country. Now, Scharf wants them near one of the bank’s office centers. Some workers will be offered paid transfers, while others will only be offered severance. Employees who don’t opt to move could lose their roles, according to a person with knowledge of the situation.
While his actions point to caution for next year, Scharf said Tuesday that consumers and businesses are both in good shape, and his base case for next year is “close to a soft landing” for the U.S. economy.
