Wells Fargo (WFC) Reshuffles Management with 70 Layoffs

Following the disclosure of the fake accounts scandal last year, Wells Fargo & Company WFC is taking various steps to restore its reputation and win back clients' confidence. The company is trying to streamline operations through various ways.

As part of the strategy, Wells Fargo is eliminating 70 jobs through removal of a layer of management. Specifically, the banking giant is merging regional and area president roles to one position – region bank president, per the Bloomberg report. Moreover, six to eight district managers will be accountable to one region bank president.

 "This change will help us become even more streamlined, effective and consistent," Mary Mack, head of community banking, said in an internal memo.

The sales scam allegation led to many setbacks, including the bank's shattered image, numerous lawsuits, triggered federal and state investigations, and congressional hearings. In addition, the bank was not being able to maintain profitability as compared to the set targets.

Therefore, Wells Fargo has doubled its cost-cutting program to $4 billion. The bank aims to control costs through consolidating operations, processes improvement through technology and mechanization, as well as outsourcing of certain operations.

While the current crisis at Wells Fargo will take some time to alleviate, we believe that the bank's initiatives should support its growth profile, moving ahead.

Currently, Wells Fargo carries a Zacks Rank #3 (Hold).

Wells Fargo's shares gained 8.7% over the last one year compared with 29.5% growth recorded by the Zacks categorized Banks-Major Regional industry.