Wells Fargo to Close Hundreds of Branches

A photo of a Wells Fargo bank.

Photo credit: Jonathan Weiss / Shutterstock

Wells Fargo had a pretty rough year. The bank announced this week that it will be closing 800 more branches by the end of 2020 in an effort to cut more than $4 billion in expenses. Last year, Wells Fargo shut down more than 200 branches following endless controversy and legal issues surrounding fake accounts that were created to meet the bank’s unreachable sales goals.

“We will have as many branches as our customers want for as long as they want them,” said John Shrewsberry, the chief financial officer.

Executives told Wall Street analysts that online and mobile banking are the main reasons why the company is losing money, but many believe digital banking plays a very small (if any) role in Wells Fargo’s troubles. The bank’s legal expenses reached a staggering $3.3 billion (or 59 cents per share) before taxes, which is more than triple what the company had set aside for legal funds the previous quarter.  

In addition to the fake account fiasco, Wells Fargo is facing numerous mortgage-related investigations along with other financial matters, most of which aren’t tax deductible. It’s no surprise that Wall Street isn’t feeling confident in the bank’s ability to come out unscathed, or at least with very few bruises.

Last month, bank executives said they would be sharing a portion of their tax cuts with employees, through both increased wages and charitable donations. It’s too early to say how many employees will miss out on these tax breaks due to losing their jobs from the closures. 

CEO Tim Sloan says things are getting better for the bank, but he couldn’t offer analysts a timeline for when Wells Fargo will be in the clear.

“I just can’t provide you with that absolute guarantee at this moment in time,” Sloan said. “Maybe someday I will, but I think it’s going to be something we look at in the rear-view mirror over a longer period of time, as opposed to having some inflection point today or tomorrow or the week after that.”

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