Wells Fargo’s chief financial officer said the San Francisco-based bank is looking at moving some work offshore as it seeks to centralize functions and slash billions of dollars in costs following its sales scandal.
John Shrewsberry, speaking at an investor conference in New York, said offshoring could be a component of a centralization project at the bank, which is pushing to change its corporate structure following the sales scandal that erupted in September. Wells Fargo’s board, in a report released last month, cited a decentralized corporate structure as a principal reason executives did not respond to bad sales practices quickly enough.
Shrewsberry said Wells Fargo decided about 18 months ago to centralize functions such as finance, human resources, risk and marketing.
He said the process provides “opportunities for moving work offshore in some instances, opportunities for automation and opportunities to stop doing things that weren’t really value-added for Wells Fargo.”
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Shrewsberry did not say how many jobs might be affected by offshoring or other centralization efforts. On Wednesday, a Wells Fargo spokesman wouldn’t comment beyond Shrewsberry’s remarks.
Wells Fargo, the third-largest U.S. bank by assets, employs about 24,000 in Charlotte, its largest employment hub.
The company is seeking to reduce costs as it remains under pressure to lower expenses after the scandal, in which employees for years opened accounts without customer knowledge to meet high-pressure sales goals.
In January, the bank announced plans to reduce annual expenses by about $2 billion by the end of 2018, with those savings getting plowed back into customer service, risk management, cyber security and other initiatives. Last month, the bank disclosed plans to chop another $2 billion in costs to boost the bank’s bottom line.
Wells Fargo has previously said it expects to reduce staff through the centralization and streamlining of various processes, and by cutting back in the mortgage business, where loan volumes have declined from a recent rise in interest rates. It has not provided a figure for how many jobs might be shed.
Such steps come as investors are keeping a close eye on Wells Fargo’s profitability since the scandal, which has cost the bank business with consumers as well as larger customers such as governments.
On Wednesday, New York City Mayor Bill de Blasio and Comptroller Scott Stringer announced plans to vote to bar the city from engaging in variety of business with Wells Fargo during a meeting Wednesday of the New York City Banking Commission. The ban would be lifted once the bank improves its federal Community Reinvestment Act score, which the Office of the Comptroller of the Currency lowered in March because of the sales scandal and other practices.
“What happened at Wells Fargo was a fraud – and there should be consequences,” Stringer said in a statement. “We need to send a message to this bank and the broader industry that ethics matter.”
In a statement, Wells Fargo said it “appreciates the continuing dialogue with New York City and deeply values our relationship with the city.” The bank said it hopes to restore a CRA rating “that reflects our strong track record of lending to, investing in, and providing service to low- and moderate-income communities.”