Wells Fargo Reduces Sales Force At Card-Processing Unit
Zacks Investment Research | Nov 14, 2017 08:38PM ET
Wells Fargo & Company (NYSE:WFC) has been restructuring its credit and debit cards processing venture with First Data Corp (FDC) for small businesses. The company laid off about 50 employees from the venture’s sales department.
Wells Fargoseesthis move as a way to align the number of employees with current volumes. Also, it remains committed to providing new jobs to the affected employees within Wells Fargo, as possible.
Per Sara Hassell, a Wells Fargo spokeswoman, these layoffs remain unrelated to the company’s digitization move coming up in 2018 in the form of a mobile app for the small-business merchant-services customers.
Wells Fargo Merchant Services charges a fee for transaction processing and a commission from First Data on equipment leases and sales. In August 2017, a federal lawsuit was filed against the joint venture, alleging it of misleading thousands of merchants by charging them unauthorized fees.
Since the breakout of sales practice scandal last year in September, Wells Fargo has laid off a considerable number of employees. Also, it has shut down branches to cope with high litigation costs.
The bank remains under heightened scrutiny by the authorities. Recently, Securities and Exchange Commission imposed a $3.5 million civil penalty on Wells Fargo’s Advisory wing.
Recently, Wells Fargo along with American Express Company (NYSE:AXP) , Bank of America Corporation (NYSE:BAC) and JPMorgan Chase & Co (NYSE:JPM) formed TruSight — a company designed to combine best practices and simplify the process of conducting third-party risk assessments of suppliers and partners across the financial services industry.
Shares of Wells Fargo have lost 1.9% year to date versus the industry ’s rally of 8.9%.
Currently, Wells Fargo carries a Zacks Rank #4 (Sell).
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