Wells Fargo is advertising more tech jobs and fewer risk and compliance roles - hinting it could finally be spending less on cleaning up after its sales-practices scandal
- Wells Fargo is aiming to staff up in tech roles and wind down hiring in risk, regulatory, and compliance-related positions, according to a job listing analysis from Jefferies and data provider Thinknum.
- "The fact that risk/compliance listings are down could suggest a peak in related hiring," analyst Ken Usdin wrote in a research report on Wednesday, noting that overall the firm's hiring fell in 2019.
- Jefferies examined the job listings as part of a sweeping report on Wells Fargo's costs. Wells is scheduled to report fourth-quarter earnings next Tuesday.
- Expenses are one part of the embattled bank that analysts are tracking closely as it operates under new leadership - and an unprecedented Federal Reserve-imposed growth cap implemented two years ago.
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A fresh look at hiring trends across Wells Fargo is offering a window into the firm's strategy while it tries to right the ship in the wake of its massive phony-account scandal.
The San Francisco bank has aimed to staff up in technology roles and wind down hiring in risk, regulatory, and compliance-related positions, according to a job listing analysis from Jefferies and data provider Thinknum published on Wednesday. Overall, hiring fell in 2019.
Wells Fargo has for years been under pressure to improve its efficiency ratio - which measures costs as a percentage of revenue. And it has had to balance new tech investments against spending on improvements on the risk and compliance side as it struggles to put the wide-ranging sales practices scandal that first came to light in 2016 behind it.
"The fact that risk/compliance listings are down could suggest a peak in related hiring," equity analyst Ken Usdin wrote in a research report.
Jefferies examined Wells Fargo's job listings as part of a sweeping report on costs. Expenses are one part of the embattled bank that analysts are tracking closely as it operates under new leadership - and a Federal Reserve-imposed growth cap implemented two years ago.
Examining job postings with Thinknum's data between July and November 2019, analysts led by Usdin found that overall, Wells Fargo's online job listings had fallen 13%. Risk, regulatory, and compliance roles fell 5% in that time - while tech-related roles rose 21%. All other areas they analyzed fell down 24%.
If in fact hiring for regulatory- and compliance-focused roles has peaked, as the data suggests, the rate at which the firm's costs are growing could be changing, Usdin said. Even still, the team at Jefferies thinks Wells Fargo "still has plenty of work to get done before costs decline meaningfully."
The bank said as part of its third-quarter report in October that it incurred legal expenses of $1.6 billion for previously disclosed issues. Wells Fargo is scheduled to report fourth-quarter earnings next Tuesday.
Its $1.9 billion operating loss mainly reflected "litigation accruals for a variety of matters, including a $1.6 billion discrete litigation accrual for previously disclosed retail sales practices matters that was not tax-deductible and reduced EPS by $0.35 per share," John Shrewsberry, the firm's finance chief, said on a conference call with analysts.
Under Wells Fargo's new chief executive, Charlie Scharf, who joined in late October from the top post at BNY Mellon, analysts are watching for how the firm will navigate relations with regulators and cut costs.
The "ability to exit the Fed consent order and reduce expenses will be a key driver for the stock," Betsy Graseck, an analyst at Morgan Stanley, said in a research note on Tuesday.
