Wells Fargo CEO vows to cut $10B in costs
Wells Fargo's chief has set his sights on the bank’s costs.
Charlie Scharf, who took over as chief executive officer late last year, said he will start cutting expenses in the second half of this year and aims to eventually trim at least $10 billion of costs. The company has too many management layers, and resources dedicated to activities that are not a priority, he said.
“This cannot continue,” Scharf said on a conference call with analysts Tuesday. “There’s no reason why as a management team we don’t have the ability to be as efficient as the rest.”
Wells Fargo – the biggest employer among U.S. banks, with 266,000 workers -- is planning thousands of job cuts to start in 2020, Bloomberg reported last week. The move has the potential to set a bleak precedent for an industry that’s been largely resisting mass layoffs during the coronavirus pandemic.
The $10 billion figure would represent more than a sixth of the 2019 total. Scharf didn’t give a time frame for that level of cuts.
Wells Fargo shares plunged as much as 8.2% Tuesday after reporting its first quarterly loss since 2008. Loan-loss provisions soared, with the bank expecting a more severe downturn from the coronavirus pandemic.
Scharf already has made little secret of his concern about costs, calling them “way too high” during a presentation in May. The firm is significantly less efficient than its largest competitors, a situation that’s been exacerbated by years of regulatory probes and sanctions -- and, now, the pandemic.