Big banks are socking away more money to cover possible losses on consumer loans, as their executives warn the long boom in credit quality has peaked.
Lenders including J.P. Morgan Chase & Co., Wells Fargo & Co., Capital One FinancialCorp. and Discover Financial Services said on earnings calls this month that they have bolstered their reserves—in some cases for the first time in years—to prepare for an uptick in loan losses.
The higher reserves in part reflect efforts to expand loan volume. As competition for borrowers intensifies, some lenders also are lowering credit-score requirements and taking on riskier customers.
Bank of America is expected to reduce staffing in its consumer banking division by as many as 8,000 more jobs.
The nation’s largest retail bank by deposits has already reduced the staffing in its consumer division from more than 100,000 in 2009 to about 68,400 as of the end of the first quarter of 2016, said Thong Nguyen, Bank of America’s president of retail banking and co-head of consumer banking at the Morgan Stanley Financials Conference Tuesday.
Those reductions have come as Bank of America transforms its retail financial centers for digital banking. Eventually, the headcount will “probably go down to the low 60s,” although Nguyen did not offer a timeframe for reductions, according to transcripts of his comments.
Bank of America has 23% fewer branches than 2009
Bank of America has 23% fewer branches and 37% fewer workers than in 2009, the bank said in a presentation on Wednesday.
The Wells Fargo loan, dubbed FastFlex, ranges from $10,000 to $35,000. It is funded as soon as the next business day, days or weeks faster than other Wells Fargo loan offerings, with a weekly repayment schedule. It represents a test of whether the bank can develop its own technology to compete with Silicon Valley firms, which often chide traditional lenders for being slow-moving and unwilling to innovate.