Wells Fargo cuts 700 jobs, overhauls exec suite and invests $5m in crypto start-up
Wells Fargo has announced it’s getting rid of 700 jobs in the Philippines, and introducing several new executives to give the bank’s organisational structure more accountability.
The job cuts, first reported by Bloomberg, will see “a portion” of roles move to India where the bank already houses roughly 12,000 tech employees. And despite cutting 200 US lending employees last year, the bank has now told around 650 of its US tech workers to relocate to “a bigger market” in order to keep their jobs.
The changes to leadership, first reported by the Wall Street Journal, will see CEO Charles Scharf split the bank’s three existing business units into five in a bid “to provide leaders with clear authority, accountability, and responsibility”, the company has said.
A restructuring was expected by the industry following a sales scandal which saw Wells Fargo’s former CEO John Stumpf slapped with a $17.5 million fine and a lifetime ban from working in the banking industry by US regulators.
Seven other former Wells Fargo executives were reprimanded by the Office of the Comptroller of the Currency (OCC), following the leadership team’s allowance of employees to open 3.5 million fake accounts to meet sales targets for its consumer-facing community bank.
“Designed to create a flatter line of business organisational structure,” the overhaul will see the firm’s former wholesale bank broken into a commercial bank focused on backend services and an investment bank focused on capital markets.
As for the consumer bank, this will also be split down the middle, with one unit focused on branches and small businesses, whilst the other rests its expertise on consumer lending. With the fifth unit overseeing wealth management, all five new heads will report directly to Scharf.
“The Wells Fargo franchise has extraordinary opportunity and power, and these organisational changes enable us to more effectively pursue our goals and take advantage of the opportunities in front of us,” says Scharf.
“These changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work.
“I am confident that this organisational model and our strengthened risk and control foundation will bring greater focus and accountability to the company.”
The new CEOs are: Mary Mack, who will head up consumer and small business banking; Perry Pelos, who will head up commercial banking; Jon Weiss, who will head up corporate and investment banking (CIB) as well as a temporary position as head of wealth and investment management; and Mike Weinbach, the only new CEO to come in externally from JPMorgan Chase, who will head up consumer lending from May this year.
Powell will also head up a sales practices oversight and management role in an effort to bring a “consistent approach to sales practice monitoring, analytics, and reporting”.
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As well as cutting hundreds of jobs and restructuring its business units, the bank has also invested in a start-up which helps banks manage cryptocurrency risk called Elliptic. The $5 million investment into the UK company, which can find and block illegal digital currency transactions, came out of the bank’s venture unit Wells Fargo Strategic Capital.
Elliptic co-founder and CEO James Smith tells CNBC that the investment by Wells Fargo is proof that banks are starting to take cryptocurrency seriously. “It’s no longer OK for a bank to stick their head in the sand and pretend it doesn’t exist,” he says.
Last month, the bank revealed it had experienced a 55% slump in its fourth quarter profit – just as new CEO Scharf joined and had to put aside another $1.5 billion for legal costs relating to the sales scandal.