Wells Fargo & Company (NYSE:WFC - News) is mulling over retrenching technology and operations workers as part of its cost containment measures, according to Reuters. The company will take this initiative with an aim to reduce about $1.5 billion quarterly operating expenses.
Moreover, according to sources, the bank is planning to layoff approximately 25 staff and removed 30 unfilled positions. Wells Fargo plans to reduce quarterly expenses for technology and staff by $188 million, and therefore more number of headcounts can be reduced in this area.
The ongoing Project Compass, the efficiency program of Wells Fargo, which was initiated at the end of 2010, aims at eliminating jobs to reduce expenses. Under the project, Wells Fargo targets to trim down quarterly expenses to $11 billion in the fourth quarter of 2012 from $11.7 billion in the third quarter of 2011. Apart from reducing jobs, the company plans to achieve its target through loss alleviation and foreclosing assets. These initiatives will be executed in the upcoming quarters.
Wells Fargo remains committed to expense management, but not at the cost of any negative impact on its revenue. Project Compass is a company-wide initiative focused on removing unnecessary complexity while eliminating duplication as a way to improve the customer experience along with the work process of its team members.
Previously also, Wells Fargo has cut 49 jobs in its financial card collections department in Sioux Falls. In January 2011, Wells Fargo also announced to trim 120 workers in its student loan operations, including many in Sioux Falls, though the company planned to transfer most of the employees to other units.
In March 2011, Wells Fargo declared that it will lay off approximately 200 employees, including 82 employees in San Antonio, 30 in Addison and 67 in Bedford, Texas in its home mortgage division. Wells Fargo employs about 13,000 people in metro Des Moines. The company’s Home Mortgage division, which is based in West Des Moines, captures approximately 25% of the U.S. home lending market. Wells Fargo also announced the elimination of 68 positions at a Vancouver call center, which supports collection of loans for Wells Fargo Financial division.
Many large Wall Street banks have started reducing their workforces to cut costs following the slowdown in economic and market activity. Further, some large Wall Street banks are laying off employees due to weak trading volumes and stringent regulations on some parts of their business.
Wells Fargo is not the only institution doing this dirty job of rendering so many jobless. Among other U.S. banks, last week, Citigroup Inc. (NYSE:C - News) planned to layoff 3,000 workers as part of its cost containment measures. Citi plans to slash 900 jobs from its securities and banking division. The move came on the back of turmoil in equity and debt markets.
In September, Bank of America Corp. (NYSE:BAC - News) planed to retrench 40,000 workers under the first phase of a proposed restructuring program for recovering its financial position. Moreover, in August, Bank of New York Mellon Corp (NYSE:BK - News) stated that it will slash about 1,500 jobs, which represents about 3% of its total workforce. State Street Corp. (NYSE:STT - News) also intends to let go 850 technology jobs through layoffs and outsourcing.
Some European banks, failing to withstand the adverse economic outlook, are slashing jobs too. UBS AG (NYSE:UBS - News) has announced its plans to cut 3,500 headcounts and Credit Suisse Group (NYSE:CS - News) stated that it would layoff 1,500 investment banking persons this month.
While the layoff story is doing rounds once again, raising the recession alarm and spreading panic among the corporate clan, some good news came from another banking giant, in September. The investment banking Chief Executive of JPMorgan Chase & Co. (NYSE:JPM - News) announced that the company has no plans to retrench employees in the near future.
Overall, until revenue generation revives, a hideous cost-to-income ratio will continue to force many more banks to reduce costs through job cuts as they need to maximize profits in order to boost capital ratios. Of course, everyone will now keep their eyes on the weak performing firms that have not yet announced job cuts.
Wells Fargo currently retains its Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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