Wells Fargo cuts 100+ Sacramento-area jobs as CEO says AI prompts ‘efficiency’
Wells Fargo will eliminate 114 jobs in Sacramento County as part of a broader push to reduce costs and incorporate more artificial intelligence in its operations.
In a notice filed Tuesday with the Employment Development Department, the bank said the cutbacks affected workers in the bank’s chief operating office as well as its consumer, small and business banking units for the capital region, located at 2125 Butano Drive in Arden Arcade. Employees were notified that day, and the layoffs — filed under the federal Worker Adjustment and Retraining Notification Act — will take effect in February, according to the letter.
The San Francisco-based bank, which also maintains a corporate hub in New York, said the job cuts are permanent. Most affected positions include customer and product support representatives and their managers.
“These business decisions are never easy,” the bank said in its notice to the state. “We are very thoughtful and deliberate in our approach, understanding the impact these decisions have on individuals at the company.”
The company told The Sacramento Bee on Thursday that it regularly calibrates its workforce “to align with market conditions and the needs of our businesses.”
“We work hard to identify opportunities for employees in other parts of the company so we can retain as many employees as possible,” a bank spokesperson said. “Where it’s not possible, we provide assistance, such as severance and career counseling.”
On the same day of the cuts, President and CEO Charlie Scharf signaled that Wells would trim more roles and take on the costs of the severances in the fourth quarter, which ends this month. Speaking at the Goldman Sachs Financial Services Conference in New York, Scharf said the bank expected headcount to continue declining as technology transforms operations.
“As we’ve gone through the budgeting process, and even pre AI, we do expect to have less people as we go into next year,” Scharf said. “We’ll likely have more severance in the fourth quarter.”
Scharf added that while AI would not fully replace human workers, it will allow Wells Fargo to operate more efficiently, particularly in departments such as legal, compliance, call centers and banking services.
Reuters reported that Scharf described the technology transition as a “positive reality” for the bank.
Since Scharf joined Wells Fargo in 2019, the bank’s workforce has declined to 210,000 employees from 275,000 — a 24% drop. Wells Fargo remains the fourth-largest U.S. bank by assets, holding $1.75 trillion, including $301 billion in California.
Charlotte, North Carolina, remains the bank’s largest employment hub, with about 27,000 workers. The Sacramento region also maintains a major footprint: the FDIC reports 32 branches in Sacramento County, 11 in Placer, seven in El Dorado, and three in Yolo. The number of regional employees was not known, but the Sacramento Business Journal says Wells hold about 14% of the four-county region’s market share of local deposits, a distant second to U.S. Bank (42% of market share).
Sacramento has long played a pivotal role in Wells Fargo’s history, dating back to the stagecoach.
Founded in 1852 by Henry Wells and William Fargo, the bank’s first Sacramento office opened at Second and J streets in the B.F. Hastings building. During the Gold Rush, it expanded across the Sierra foothills, exchanging gold dust and operating stagecoach delivery routes to the young river city and onto San Francisco.
In 1986, Wells Fargo merged with Crocker Bank — a historic $1.07 billion deal that, at the time, was the largest in U.S. commercial banking history. It grew to its current size following the hostile takeover of First Interstate in 1996 for $11.6 billion and its $14.8 billion acquisition of Wachovia in 2008 amid the Great Recession and burst housing bubble.
Wells Fargo’s future with AI
Scharf laid out a vision for a leaner bank powered by new technology, acknowledging a reality that others are “afraid to say.”
“We’re going to have lower headcount in the future,” Scharf said.
He was clear that AI will not “totally replace humans” but will allow the company to operate with fewer people. AI is expected to create “significant efficiency improvements” across numerous departments, from compliance and legal to call centers and investment and commercial banking.
“These are all opportunities to do things much, much more efficiently with AI that humans have been doing,” Scharf said.
The rollout of generative AI tools has already led to a 30% to 35% increase in code-writing efficiency for the bank. “We’ve not reduced the number of people we have coding today,” Scharf said, “but we’re getting a lot more done. That’s really significant.”
Since federal regulators lifted Wells Fargo’s $1.95 trillion asset cap six months ago, the roughly $2.5 billion more that the bank spent annually for regulatory work can go toward other investments, including AI. The bank’s punishment was for its widespread sales account scandal exposed in 2016.
Last month, Scharf said in an interview with The Charlotte Observer that everyone at the bank needs to be trained on AI at any level. “We continue to have opportunities to drive efficiency which will allow us to increase the level of investment,” he said.
The Charlotte Observer’s Catherine Muccigrosso and The Sacramento Bee’s Annika Merrilees contributed to this story.