Wells Fargo to slash 2300 mortgage jobs

Wells Fargo & Co, the fourth-largest bank in the US by assets, is slashing about 2,300 mortgage-related jobs across the country, including the lending staff in Alabama, North Carolina and Iowa, the Deutsche Press Agency reported yesterday.

It has given out a 60-day layoff notice to 2,300 employees in its home-lending unit, the report said.

In July, the Industrial & Commercial Bank of China, which is seen as a symbol of the financial might of the country, was overtaken by Wells Fargo as the world's biggest bank by market capitalisation, worth $236 billion (See: Wells Fargo overtakes Industrial & Commercial Bank of China as world's largest lender).

These job-cuts are part of a renewed push to cut Wells' overall costs to help offset lower mortgage lending and falling profit margins initiated by chief executive John Stumpf.

The decline came as 30-year mortgage rates rose 12 basis points to 4.68 per cent, matching the year's high first hit in July.

Wells Fargo has said mortgage lending will slow for the rest of this year as higher interest rates make refinancing less attractive.

Moreover, the loans, which made 70 per cent of the mortgage market, fell to 50 per cent and could further fall.

Applications for US home loans fell for a second straight week as higher interest rates reduced refinancing activity, an industry group reported Wednesday.

Wells has in recent months been trying to build up its capital markets and investment banking units as a way of diversifying its revenues though home loans are by far the bank's biggest business.

In its report on 26 July 2013, the International Monetary Fund said the US economic recovery has remained tepid and growth was expected to be subdued at 1.7 per cent for the year (See: US economic recovery `tepid': IMF).