& Co., in cost-cutting mode, recently asked outside technology consultants to refund some of the money the bank has spent with them in the past year.
The request for rebates came from Saul Van Beurden, the bank’s new head of technology, at a July meeting with vendors, according to people familiar with the matter and emails reviewed by The Wall Street Journal. The bank told the vendors, who in many cases supply the bank with contract tech employees, that this was because they had benefited from increased business due to Wells Fargo’s regulatory woes.
The bank characterized the rebates, for 2.5% of what vendors had earned, as voluntary, according to the emails. Wells Fargo officials told vendors that they had to decide whether to participate or not by close of business on Aug. 2. The bank will provide instructions for sending the “rebate checks” at a later date, the emails said. A Wells Fargo spokesman declined to comment.
Wells Fargo has been dealing with a morass of regulatory problems since its 2016 sales scandal. Revenue growth has flagged, so the company has taken an ax to expenses with mixed results. The bank has walked back some expense targets as it continues to operate without a permanent CEO. It still says it will reach a $53 billion annual expense figure in 2019, a more than $3 billion cut from last year.
Executives have said that spending on technology workers has been one reason expenses have remained higher than the bank would like.
The meeting with vendors was held on July 18 in Charlotte, N.C., the people familiar with the matter said. Mr. Van Beurden, whose move to Wells Fargo from
& Co. was announced in January, outlined other cost-cutting measures, including eliminating offices with low occupancy and cutting back on middle management, the people said.
The bank’s technology unit also plans to cut contractors by between 3% and 7%, according to the emails. Many of the bank’s technology jobs are held by outside consultants, a typical practice in banking.
Some of the contractor roles involve helping the bank fix regulatory problems, while others focus on the technology behind more routine aspects of the business.
Overall expenses fell 4% at Wells Fargo in the second quarter from the prior year, but that was largely due to factors outside of management’s control like lower Federal Deposit Insurance Corp. assessments. Salaries, benefits and equipment costs rose.
The bank’s spending on “risk management including data and technology have exceeded expectations and are anticipated to continue,” Chief Financial Officer John Shrewsberry said on the bank’s most recent earnings call.
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