Wells Fargo cuts 70 managers amid fake-accounts scandal

Bloomberg

Wells Fargo & Co., the lender struggling to overcome a fake-accounts scandal in its community bank, said the division’s new leader is cutting about 70 senior executive jobs.
The lender will reduce the number of regional and area presidents to 91, Mary Mack, head of the retail bank, said Friday in a memo to staff, a copy of which was obtained by Bloomberg. Bank spokeswoman Bridget Braxton confirmed the contents of the memo and said employees whose positions are eliminated will remain staff members for 60 days until further steps are decided.
Most of the remaining managers will be re-titled as region bank presidents with direct responsibility for more employees than before, in a move aimed at reducing management levels across the branch network, Mack wrote. Across its 10 geographical divisions, Wells Fargo previously employed 160 regional and area presidents.
“Change is hard, yet change is necessary to make sure we are well positioned for the future,” Mack wrote. “In order to truly be better, we must put the right structure in place,” she added.
The community-banking division, which houses the retail bank, has generated weaker profit since September when Wells Fargo was fined $185 million because employees had been opening accounts for more than a half decade without customers’ permission. This week, the firm’s consumer operations revealed another scandal, announcing that the bank had charged as many as 500,000 customers for auto insurance they didn’t need.
Mack, who took over as head of community banking last year, had shuffled higher-level executive positions in March. She collapsed her top-ranking regional deputies from three positions to two, putting Lisa Stevens and Michelle Lee in charge, according to a memo Bloomberg obtained at the time. Their colleague John Sotoodeh, who had previously oversaw a third main region, was demoted to lead regional president.
The three executives remain in those positions, as do others based on factors including interview results, performance, sales quality and tenure, according to Friday’s memo. Mack said some departing employees have chosen to retire while others didn’t want to move to a new job.
With the latest reorganisation of the community bank, about 41 percent of the 58 regional executives senior enough to be listed in the firm’s last public filing of key employees will have left their roles. The last public report was in early 2016, when Carrie Tolstedt oversaw the retail bank. A Wells Fargo board investigation assigned her much of the blame for the sales goals that regulators found drove employees to open bogus accounts.
Some of the managers who will no longer work in regional banking are among those described by Bloomberg in a November story that profiled supervisors who won promotions amid cross-selling, the practice of persuading individual customers to sign up for more bank products.
Two executives who helped run Southern California are no longer working as regional bank managers: David DiCristofaro, who is now a leader in branch experience; and Ben Alvarado, who is “looking for new opportunities,” according to a separate memo Mack sent to staff in May. The bank previously fired some of the other managers profiled in the story.