Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Vendors squeezed in Wells Fargo cost cutting push

share with twitter share with LinkedIn share with facebook
share via e-mail
0
11/12/2019 | 04:52pm EST
A Wells Fargo logo is seen at the SIBOS banking and financial conference in Toronto

At least seven vendors have given Wells Fargo & Co a partial refund for their services after bank executives pressured the contractors to return 2.5% of revenue earned last year, according to sources familiar with the matter.

In a bid to cut costs to offset higher regulatory spending, Wells Fargo gathered about 14 of its IT vendors in Charlotte in July and asked for a rebate for 2018. In doing so, the bank claimed the vendors had benefited from increased business from its various scandals.

Many vendors felt compelled to pay up out of fear they may lose out on future business from the Wall Street giant.

Wells Fargo spokesman Peter Gilchrist said participation in the voluntary rebate would not be considered when awarding future contacts. "Wells Fargo’s investment in technology remains a strong priority, and we value the strategic relationships we have with our vendors.”

Still, many vendors feared not fulfilling the refund request would make their firms less competitive as Wells Fargo scales back its use of outside contractors. The bank is expected to issue a new request for business proposals from its IT vendors in the first quarter of next year.

The San Francisco-based bank has leaned on cost cuts in recent years as the fallout from a wide-ranging sales practices scandal has stunted revenue growth. However, increased spending on headcount and technology to satisfy regulators has caused the bank to back away from its expense targets.

Chief Financial Officer John Shrewsberry recently pointed to professional services, or work by consultants, as a expense line that analysts and investors can expect to be reduced in the next quarter. Costs attributed to outside professional services and data processing declined 17% last year.

In 2018, the bank spent $660 million on outside data processing, according to financial filings. If the bank recouped 2.5% of that cost, or $16.5 million, it would only make a small dent in its $56 billion annual budget. But for smaller IT firms like Richmond, Virginia-based Apex Systems, giving a 2.5% refund to a large client like Wells Fargo could mean paying employees less or taking a hit to earnings.

A Wells Fargo representative urged vendors not to pass on the expense to employees in the form of pay cuts, according to an email exchange viewed by Reuters.

Some of Well Fargo's IT vendors have already paid the 2018 rebate in full while others have asked to pay by installments, according to the sources familiar with the situation.

But the sources, who requested anonymity since the matter is private, said at least two vendors have refused to pay the rebate as a matter of principle.

"They’re just expecting to unfortunately have the relationship end,” one of the sources said.

(Reporting by Imani Moise; Editing by Tom Brown)

By Imani Moise

Stocks mentioned in the article
ChangeLast1st jan.
CHINA RESOURCES BEER (HOLDINGS) COMPANY LIMITED -0.47% 42.3 End-of-day quote.55.51%
WELLS FARGO & COMPANY 2.14% 54.37 Delayed Quote.17.99%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
09:32pMusk's defamation win may reset legal landscape for social media
RE
09:29pFAA seeks $3.9 million fine from Boeing for defective parts on 737 NG planes
RE
09:26pELON MUSK : Tesla boss Elon Musk wins defamation trial sparked by 'pedo guy' tweet
RE
09:25pJPMorgan banker testifying for cartel prosecutors says there was no agreement
RE
09:24pMexico, U.S. discuss 'last issues' in trade pact, faced with new steel demand
RE
09:24pMexico official lauds progress on trade deal but says work remains
RE
08:51pSaudi energy minister talks OPEC+ unity, backs Aramco to soar
RE
08:13pTrump calls for World Bank to stop loaning to China
RE
08:01pCAYMAN ISLANDS GOVERNMENT : Work Begins on Global Strategy
PU
07:45pTrump will make final call on China tariffs, likes direction of talks - Kudlow
RE
Latest news "Economy & Forex"