Wells Fargo has quietly undertaken a companywide study to streamline five major departments, in a move that could lead to job losses, the Observer has learned.
The initiative, announced internally late last month, is the largest of its kind since the San Francisco-based lender undertook a similar review after its 2008 purchase of Charlotte’s Wachovia Corp., a person familiar with the situation said Wednesday.
Wells Fargo declined to comment.
The five departments in the review are human resources, technology support, finance, communications and marketing, the person said. It was not immediately clear how many employees work across those areas.
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In Charlotte and elsewhere, an unknown number of layoffs are a possibility as the bank reviews job functions within the five departments, the person said. Wells Fargo employs roughly 23,000 in the Charlotte metropolitan area, making it the bank’s largest employment hub.
The goal of the initiative is to find savings that the company would reinvest in a variety of areas, including cybersecurity, risk and compliance, as well as new technologies to improve customer experience, the person said.
Dubbed Efficiency and Effectiveness, or E&E, the project is expected to last five years, the person said.
In Charlotte, news of the initiative has some of the lender’s employees worried they might lose their jobs.
“Employees have asked, ‘Does this mean job cuts? Does this mean layoffs and displacements?’” said a Wells Fargo employee who works in Charlotte but asked not to be identified for fear of reprisals. “It sounds to all of us like it means layoffs.”
Wells Fargo cut its total employment last year. It reported 264,500 full-time employees as of the end of the year, a drop of 400 from the end of 2013.
The new streamlining effort is the biggest for the fourth-largest U.S. bank by assets since “Project Compass.” That companywide savings initiative was designed to reduce noninterest expenses, including those tied to its acquisition of Wachovia. Launched in 2010, the project resulted in layoffs, including in the Carolinas.
Wells Fargo’s latest efficiency program comes as banks nationwide are striving to increase their profitability at a time of low interest rates, which restricts what banks charge on loans and hurts their net interest margins.
The company posted $5.8 billion in profits in the first quarter, a 2 percent drop compared with the same period last year. Revenue gains were offset by higher expenses for salaries, commissions, incentives and employee benefits.
Chief Financial Officer John Shrewsberry told analysts last month that Wells Fargo is trying to be efficient and “make the most of every dollar we spend.” But the bank is also having to reinvest in other areas, he said.
“Now is a time when there are big demands in information security and compliance and risk management,” he said.