By Nupur Anand
NEW YORK (Reuters) – Wells Fargo could see its headcount shrink further as it aims to improve efficiency, Chief Financial Officer Mike Santomassimo said on Tuesday.
The bank is cutting its workforce starting in the third quarter of fiscal 2020. It has reduced its employee base by about 40,000 and the cuts are likely to continue, Santomassimo said.
“I think there’s a lot of work to be done, and you’ll see that in the headcount numbers,” he added.
Wells Fargo had 233,834 employees at the end of June, compared with 243,674 in the second quarter last year.
The bank also restructured its mortgage business, which resulted in some layoffs.
The industry is also under pressure in commercial real estate, and particularly in office lending, which has proven to be a major concern for banks, which have seen rising financing costs for many buildings that have been largely vacated by workers who prefer to work remotely.
Although there is a systematic tension in office real estate, the other portfolios are doing well, Santomassimo said. There may be some continued pressure in the CRE portfolio, but it may not be the same as the bank has seen in previous quarters.
In the June quarter, Wells Fargo increased its allowance for loan losses by $949 million to reflect potential losses on office loans.
Wells Fargo is still operating under an asset cap that prevents it from growing until regulators say it has lingering problems from the fake accounts scandal. The company still has nine open license orders from bank regulators that require more oversight of its operations.
Santomassimo gave no indication of when the asset cap would be lifted, but said the bank was working to fix its internal issues.
(Reporting by Nupur Anand in New York; Editing by Andrea Ritchie)