More than 26,000 employees at the loss making US bank Wells Fargo could be impacted by a restructuring plan that is being deliberated by it according to reports. The major focus of the re\structuring effort is implementing a steep cut in its number of employees to reduce costs.
The plan is to be implemented over the next three years and the company expects that the measures would help it to reduce the number of employees by anywhere between 5 per cent and 10 per cent. The bank is set to adopt a two pronged strategy to achieve that – cuts and regular attrition.
According to the head of the bank Tim Sloan, the present trend in the banking industry is that customers as well as banking services are moving on to the online platforms and therefore this has made a number of bank positions redundant. The measure that are to be adopted by the bank would help it to become more efficient and thereby more competitive in the changed industry scenario.
The bank had also faced a number of very damning scandals and it is attempting ot emerge out of those.
There was huge public outrage and regulatory chiding after ir was revealed that the California-based bank in 2016 had urged a number of it employees to meet increased targets which resulted in the employees opening up millions of accounts without taking prior permission from customers permission
In another incident that concluded in spring this year, a fine of $1bn was imposed on the bank by US regulators against a settlement of legal claims of misconduct in relation to mortgage and auto loans.
An unprecedented order that restricted the firm’s growth pending governance improvements was pronounced in February this year by the US Federal Reserve which cited “widespread consumer abuses and other compliance breakdowns” by the bank.
The bank’s financial position has been significantly damaged because of these scandals.
The plans of the bank are to reduce its overall expenses by $3bn by 2020 because in the first six months of the current year, it reported a 10 per cent year-on-fall in profit.
The bank had also announced the retrenchment of hundreds of workers in its home loan unit in August.
“We are addressing past issues, enhancing our focus on customers, strengthening risk management and controls, simplifying our organisation, and improving the team member experience,” Sloan said:
The effected employees would be provided support by the bank, he said, but also mentioned that even after the planned reduction in its workforce, it would still remain the top employing bank he United States.
At the end of June, there were 264,500 employees in the bank. It was ranked as the third largest bank in the US as of March.
(Adapted from BBC.com)