Wells Fargo: Anticipating Changes and Layoffs

On December 9, the CEO of Wells Fargo, Charlie Scharf, indicated during a Goldman Sachs conference that the bank is likely to see increased layoffs and severance costs in the fourth quarter. He pointed out that upcoming changes, particularly with artificial intelligence, will significantly alter operations at the bank.

“As we’re working through our budget for next year, we’re expecting some reductions in headcount, even before AI fully rolls out,” Scharf remarked. He also mentioned that severance expenses would probably rise in the upcoming quarter.

Artificial Intelligence’s Role

Scharf emphasized the importance of AI, highlighting its potential to boost efficiency and potentially reduce the workforce. However, he clarified that AI won’t entirely replace humans; instead, it will transform how work is performed. He reiterated that the anticipated employee turnover aligns with Wells Fargo’s efficiency strategy.

Wells Fargo plans to implement AI gradually over the next year, framing these changes as crucial for improving efficiency. Scharf previously noted that while AI may lead to workforce reductions, it also presents significant opportunities for the bank.

Since Scharf’s arrival in 2019, the bank’s employee count has declined from 275,000 to around 210,000 by September 30, 2025. He added that banks, including Wells Fargo, have yet to fully optimize their operations to take full advantage of AI.

“Our engineering team is now 30% to 35% more effective with the code they write thanks to Gen AI tools. We haven’t reduced our coding staff, but the output is significantly higher, which reflects real efficiency,” he noted.

Acquisition Strategy

This past June, the Federal Reserve lifted a $1.95 trillion asset cap imposed on Wells Fargo after the bank’s fake account scandal, which could facilitate its growth under Scharf’s leadership. Investors and analysts are hopeful about Wells Fargo’s potential for growth.

However, Scharf emphasized the bank’s selective approach to acquisitions, stating that it only seeks out opportunities with substantial financial returns and strategic benefits. He stated, “I’m not looking for anything that would just profit the company.”