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2 Years of Scam Take Its Toll on Wells Fargo, to Axe 26,500 Jobs

Wells Fargo has been suffering in loans and deposits due to its scandal for continuously two years. Its stock has been reduced in the market. The bank had to close about hundred branches and fire 26,500 jobs till now. And perhaps due to such crucial circumstances, Wells Fargo has given out opportunity of aggressive buybacks of shares to its shareholders. Wells Fargo has given out $7.4 billion to buy back their stock during 3rd quarter. That is thrice the amount spent by them the previous year.

For the next 8 quarters after the scam about creating fake accounts, the bank has spent nearly $3.2 billion in each quarter for the purpose of buybacks. That accumulated to 45% more than how much the bank has spent for past 8 quarters. Wells Fargo did a splendid task by introducing the buybacks knowing how much Wall Street is fond of them. In the last year, the stock has reduced by 24% for Walls Street. It would have reduced even more if the bank had not decided to go for buybacks.

Director of liquidity research of TrimTabs investment research, David Santschi, commented that the bank did the right thing. Since they were unable to get hold of new investors, they made their shareholders buy the stocks. They must have been trying to cope up with the interests’ loss due to scandals. Following the same trend, S&P 500 have also incremented their quarterly buybacks by 12%.

Big banks across the US are now focusing hugely on buybacks. The Federal Reserve has allowed a strong strategy for capital return from huge banks. Thus, they can be free to give back quite an amount of money which has been accumulated after the crisis in 2008. Big banks have shifted their focus from front desk employers to shareholders and payments from executives.

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