As part of its efforts to adapt to the dynamics of the evolving business trends and overhaul some units, Wells Fargo & Company WFC slashed more than 200 jobs in its U.S. lending divisions, as reported by Reuters.
The job cut will be affecting energy lending team of the investment bank and the agriculture lending group of the commercial banking department. According to sources, 22 bankers from the energy team lost jobs this summer. Further, the agricultural bankers’ job cuts will take place majorly in rural areas. Particularly, North Dakota and South Dakota’s agricultural bankers count will be reduced by half.
Although the agricultural lending is likely to be cut by at least 25%, representatives for the bank did not confirm the count. The motive behind this job elimination by Wells Fargo is to centralize its operations and reduce the bank’s risk component.
Notably, the layoff procedure affected the energy companies and the finance-needy farmers, specifically the bank’s soybean, corn and grain farm customers. This is because, at this time, such customers need loans to finance their spring planting operations.
Meanwhile, the banking giant is hiring for the agricultural teams of California, Wyoming and Idaho. Thus, the net elimination of the team will be 5%.
Therefore, these activities do not aim to reduce Wells Fargo’s exposure in the agricultural team, and are likely to benefit the bank in the upcoming period. Further, such actions are in line with the bank’s motive to utilize resources in a way that best serves its clients. However, mounting expenses related to such moves might act as headwind.
Wells Fargo is not the only financial institution which is retrenching jobs. Several others, including Deutsche Bank AG DB, HSBC Holdings plc HSBC and Invesco IVZ, have been taking efforts to restructure businesses by reducing workforce.
Wells Fargo’s shares have gained 11.9% so far this year, underperforming the industry’s rally of 24.1%.
Currently, Wells Fargo carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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