Wells Fargo warns of big severance expense in Q4

Wells Fargo & Co (NYSE: WFC) opened in the red today after Charlie Scharf – its Chief Executive warned of a rather large severance expense in the final quarter of 2023.

Turnover has come down at Wells Fargo

Scharf expects severance costs to fall between $750 million and close to $1.0 billion in the fourth quarter. He made the revelation at the Goldman Sachs Financial Services Conference.

We have seen turnover come down and so because of that, we’re likely going to have some more severance than we otherwise would have anticipated.

The announcement arrives about a month before the bank is slated to report its financial results for the fourth quarter. Consensus is for it to earn $1.24 a share versus 67 cents per share a year ago.

$WFC is currently down 8.0% versus its year-to-date high.

Wells Fargo may execute layoffs in 2024

Expected severance costs are related to layoffs that Wells Fargo plans on executing in the coming year, said a spokeswoman of the financial services behemoth on Tuesday.

The bank is expected to offer severance or paid relocations to bring its employees near one of its office hubs. Those who choose not to move could reportedly lose their jobs as Wells Fargo remains focused on efficiency.

Note that the multinational had 227,363 employees in total at the end of September.

Earlier this year, Wells Fargo agreed to a $35 million civil penalty to settle claims that it overcharges customers for investment advice as Invezz reported here.