Wells Fargo CEO warns of roughly $1 billion in severance costs in the fourth quarter as layoffs loom.

Wells Fargo CEO Charlie Scharf said on Tuesday that the company's low personnel turnover means it would likely incur a high severance charge in the fourth quarter.

"We're looking at something like $750 million to a little less than a billion dollars of severance in the fourth quarter that we weren't anticipating, just because we want to continue to focus on efficiency," Scharf said at a Goldman Sachs conference in New York.

According to a bank spokesman, such charge is an accrual for job layoffs that Wells Fargo expects to make next year. The corporation has refused to reveal how many jobs will be lost.

Employee attrition has slowed this year, so Wells Fargo needs to be "more aggressive" in managing personnel, according to Scharf.

Wall Street executives such as Scharf and Morgan Stanley CEO James Gorman have stated that the extremely low attrition rate among their employees has left them obese. 

Over the last year, the industry has been laying off workers to deal with increased funding costs, a lengthy decline in Wall Street deals, and concerns about loan losses.

Wells Fargo, the fourth-largest bank in the United States by assets, was already among the most active in laying off people this year, thanks in part to its exit from the mortgage market.

So far in 2023, the bank has shed approximately 11,300 positions, or 4.7% of its workforce, and has 227,363 employees as of September.

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