American banking giant Wells Fargo has unveiled plans to cut down costs to the tune of $8bn over a period of four years.
The cost savings will be centred around organisational restructuring, additional branch and job cuts, reduction of office space by up to 20% by the end of 2024.
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The bank further said that its organisational restructuring will involve more than 250 ‘efficiency initiatives’.
However, the cost cuts are not expected to include Well Fargo’s plans to exit from some of its non-core businesses including private student loan business, international wealth management and direct equipment finance in Canada.
Wells Fargo is also planning to exit its asset management and corporate trust businesses along with rail leasing portfolio, which will also not be included in the $8bn cost-cutting plan.
The bank expects nearly half of the $8bn in cost savings or $3.7bn to be achieved in the fiscal of 2021.
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By GlobalDataSome of the cost cutting plans that started last May involved the elimination of one or two layers of management across businesses and functions for increased span of control.
Last year, nearly 329 branches were shuttered and this year a further 250 branches are expected to be closed.
The prior year also saw a 20% staff reduction at its branches, driven by lower consumer transaction volume and a shift towards digital transactions. In response to the changing trend, the bank will continue to adjust its staff this year.
In Q4 2020, the banking group reported nearly $18bn in total revenue. This is a 10% decrease compared to the prior year figure of $19.8bn.
On the bright side, the San Francisco-based lender’s net income increased 4% year-on-year to $2.99bn.
Wells Fargo CEO Charlie Scharf said: “Our agenda is clear and we are making progress.
“We have prioritised and are moving forward on our risk and control buildout – the recently terminated BSA/AML consent order is just one of many, but it is an important step forward; we have a new management team in place; the disciplines we use to manage the company are completely different than one year ago; we have clarified our strategic priorities and are exiting certain non-strategic businesses; and we have identified and are implementing a series of actions to improve our financial performance.”
