Wells Fargo CEO Charlie Scharf said Tuesday that low staff turnover means the company will likely book a large severance expense in the fourth quarter.
“We’re looking at something like $750 million to a little less than a billion dollars of severance in the fourth quarter that we weren’t anticipating, just because we want to continue to focus on efficiency,” Scharf told investors during a Goldman Sachs conference.
That expense is an accrual for worker layoffs that Wells Fargo expects to make next year, according to a bank spokeswoman.
The company needs to get “more aggressive” on managing headcount because employee attrition has slowed this year, Scharf said.
Wall Street leaders including Scharf and Morgan Stanley CEO James Gorman have said that unusually low attrition among their workers has left them bloated. The industry has been cutting jobs in the past year as it deals with rising funding costs, a prolonged slump in Wall Street deals and concern over loan losses.
Wells Fargo was already among the most aggressive in making layoffs this year, thanks in part to its retrenchment from the mortgage industry. The bank cut 11,300 jobs so far this year, or 4.7% of its workforce, and had 227,363 employees as of September.
Under previous leadership, employees had fanned out across the country. Now, Scharf wants them near one of the bank’s office hubs. Some workers will be offered paid relocations, while others will only be offered severance. Workers who don’t opt to move may lose their roles, according to a person with knowledge of the situation.
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