Wells Fargo is aggressively targeting $8 billion in cost savings, to include job cuts and other organizational streamlining efforts, over the next three to four years, the company said Friday in its fourth quarter earnings call.
The bank's cost-cutting target does not include announced plans to exit several areas — its private student loan business, international wealth management and direct equipment finance in Canada — which are not core to the firm's mission, President and CEO Charles W. Scharf said during the earnings call.
Wells Fargo is also exploring options to exit its asset management and corporate trust businesses, as well as its rail leasing portfolio, which would not be included in the $8 billion cost-cutting measure, Mr. Scharf said.
"These other activities, which may be good businesses, are not consistent with (Wells Fargo's) core strategic priorities," he said.
On Friday, company leadership for the first time publicly said they were looking to sell the asset management unit, plans which anonymous sources confirmed with Pensions & Investments in October. The firm did not provide further details on the unit sale during the earnings call, but private equity firms GTCR and Reverence Capital Partners were among firms last month weighing a second round of bids for the unit.
Wells Fargo Asset Management had $603 billion in assets under management as of Dec. 31, down 1% from Sept. 30 and up 18% from a year earlier, the firm's earnings release showed.
Year-over-year asset increases were due to net flows into money market funds and higher market valuations, Michael P. Santomassimo, senior executive vice president and CFO, said during the earnings call.
During the fourth quarter, Wells Fargo reported $3.8 billion in revenues within its wealth and investment management business, which includes its asset management unit, up 4% over the third quarter and down 4% over the year-earlier quarter.
Revenue decreased 4% over the year predominantly due to lower net interest income as a result of lower interest rates, the earnings release said.
Headcount in wealth and investment management stood at 29,515 as of Dec. 31, reflecting a loss of 1,303, or about 4% of staff, over the year.
Since May, Wells Fargo has made companywide job cuts, which included eliminating one to two layers of management within various businesses and functions, an earnings presentation shows. The firms also expects "additional efficiencies across most areas as we continue to streamline the company," the presentation said.
Wells Fargo closed 329 retail bank branch locations last year and expects to close another 250 branches in 2021, according to the presentation.
The company expects to realize $3.7 billion of its $8 billion expense savings target in 2021, presentation materials show.
Bloomberg contributed to this story.