Wells Fargo (WFC) To Combine Corporate And Investment Banks

 | Apr 05, 2018 11:10PM ET

With a view to trim costs and enhance the quality of customer service, Wells Fargo & Company (NYSE:WFC) is making plans to merge corporate and investment banks. The news was first reported by the Wall Street Journal.

Citing people familiar with the matter, the journal reported that the bank’s restructuring move is likely to result in job cuts in industry coverage, advising, equity and debt capital along with corporate-level relationship managerial positions.

Since news of the fake account scandals broke out, a lot of employees at Wells Fargo have been laid off. In July 2017, the company had removed about 70 senior executives from their posts. Some of the employees had moved to lower level positions while some preferred to shift to a new company.

Furthermore, in its annual filing, Wells Fargo disclosed that it overcharged customers in its investment and fiduciary services business. Also, the company said the review process of the Wealth and Investment Management segment is in “preliminary stages”.

Due to the review conducted on the bank’s operations and staff level adjustments, some positions of Wells Fargo’s senior and junior level employees across credit sales and trading areas are likely to be affected. Per the newspaper, layoffs due to the review are not linked with Wells Fargo’s integration plans.

We believe that Wells Fargo’s bottom-line growth is likely to be affected by legal hassles in the near term. However, the bank’s efforts to revamp its financial position along with support from lower tax rates and rising rate environment might help it overcome the negatives.

Wells Fargo’s shares have lost 3.4% over the past six months against the 5.7% growth for the industry it belongs to.