Picture a conference in Palm Desert, Calif., where the weather is warm and the activities are as much recreational as educational. Wells Fargo bankers were recently treated to such a company-sponsored trip to the city, a common feature in the finance world following a successful year.
Now, just weeks after the retreat, many who went to Palm Desert have had to pack their bags after Wells Fargo laid them off. Hundreds of mortgage bankers have reportedly lost their jobs in the past week as the San Francisco–based bank shifted its strategy, CNBC reports. The cuts involved more than 500 employees in the mortgage unit, according to Bloomberg.
Originally announced on Tuesday, the layoffs at Wells Fargo have affected several top-performing mortgage bankers and home loan consultants, CNBC reports. The compensation of many of those laid off reportedly hinged on sales volume.
Chief executive Charles Scharf took office in 2019, and under his leadership, Wells Fargo has been shrinking its mortgage market operations to focus more on serving existing clients and minority communities. The layoffs affected those in departments where the company is no longer placing as much emphasis.
“We announced in January strategic plans to create a more focused home-lending business,” a Wells Fargo spokesperson told Fortune. “As part of these efforts, we have made displacements across our home-lending business in alignment with this strategy and in response to significant decreases in mortgage volume.”
Housing slump hits
The slump in the housing market began to hit Wells Fargo last year. The lender cut hundreds of its mortgage employees in late 2022 following months of slowing business activity. Its mortgage volumes shrunk significantly in the last three months of 2022, down 70% to $14.6 billion compared to the same time in 2021.
Its peers have taken similar steps to ease costs and cope with sluggish business activity. JPMorgan Chase earlier this month slashed hundreds of jobs in its mortgage lending division, which took a hit under the Fed’s hawkish interest rate policy, which makes it harder for potential homebuyers to access loans. Other banks such as Morgan Stanley and Goldman Sachs have also cut thousands of jobs.
Wells Fargo has been in troubled water for a few years amidst a bevy of scandals that came to light in 2016, involving mismanaged funds and fraudulent accounts. These cost Wells Fargo millions of dollars in penalties and legal fees and resulted in a cap on the bank’s assets. Last December, the bank reached a settlement of $3.7 billion with the Consumer Financial Protection Bureau, including over $2 billion to pay back consumers.
The company is also being investigated for allegedly conducting fake job interviews for minority candidates to fulfill diversity guidelines. The errors in record-keeping and other wrongful practices took place at least through 2011 and 2022.
Wells Fargo did not immediately return Fortune’s request for comment made outside regular operating hours.
