Wells Fargo (NYSE:WFC), the largest U.S. bank by number of employees, has resumed cutting thousands of workers from its payroll, a process that it had put on hold due to the coronavirus pandemic, Bloomberg reported Friday.
"Starting in early August, we resumed regular job displacement activity," a spokesperson for the bank told Bloomberg. "We are at the beginning of a multiyear effort to build a stronger, more efficient company."
One of the largest U.S banks, Wells Fargo had more than 240,000 employees at the end of the second quarter.
Although the layoffs were expected, this is the first move the bank has made since CEO Charlie Scharf announced on its most recent earnings call that Wells Fargo will attempt to trim its annual expenses by $10 billion.
The straightforward parts of that plan will involve cost-cutting via branch closures and consolidation, as well as job cuts that could hit tens of thousands of workers when all is said and done.
Where things could get difficult is on the side of the ledger where expenses must be added, as the bank also will have to invest in technology and enhance its regulatory infrastructure.
Wells Fargo has struggled since its phony-accounts scandal broke, facing costly litigation, a $3 billion fine from regulators, and more revelations about other scandals. The Federal Reserve also put a $1.95 trillion asset cap on the bank that it's already brushing up against.
Although major layoffs will be particularly hard on those affected given that the U.S. is in a recession with high unemployment, the announcement could be seen as welcome news for shareholders. The company's stock has been battered by poor earnings results, and it has trimmed its dividend by 75%.
"Whatever sense of urgency existed before is going to be small relative to what it is going forward," said Scharf on the company's recent earnings call, referring to the bank's commitment to improving its performance.