Wells Fargo Advances Multi-Year Simplification Plan to Enhance Returns

Wells Fargo & Company WFC has been pursuing a strategic exit from various non-core and lower-return businesses to streamline its focus on consumer banking, commercial lending, and high-return areas. This effort, led by CEO Charlie Scharf since 2019, aims to cut costs significantly—targeting up to $10 billion annually—and reallocate capital to core franchises.In sync with this, in May 2025, WFC agreed to sell its rail lease portfolio to a joint venture of GATX and Brookfield. Marking a significant step in this transaction, this month, GATX Corporation and Brookfield Infrastructure Partners L.P.  received all required regulatory approvals to close the deal on or around Jan. 1, 2026.Earlier, in March 2025, the bank completed the sale of its non-agency third-party commercial mortgage servicing business to Trimont, backed by Värde Partners, reducing exposure to operationally complex commercial real estate servicing activities.In 2023, the company also sold approximately $2 billion of private equity fund investments in Norwest Equity Partners and Norwest Mezzanine Partners to institutional investors, further aligning its portfolio with core banking priorities. The company also pursued strategic simplifications in its Home Lending business by exiting the Correspondent business and reducing the size of its Servicing portfolio, enabling a more focused mortgage operation targeting bank customers. In 2021, the bank completed several major divestitures, including the sale of its Asset Management business to GTCR and Reverence Capital Partners, Corporate Trust Services to Computershare, and the Canadian Direct Equipment Finance business to TD Bank, allowing Wells Fargo to concentrate on core consumer and corporate clients.Earlier, in 2019, Wells Fargo sold its Institutional Retirement & Trust business to Principal Financial Group, and in 2018, it divested its auto finance segment in Puerto Rico to Popular, Inc.Together, these simplification efforts are expected to reduce operational costs, improve capital efficiency, and enable Wells Fargo to redeploy resources toward higher-return areas, strengthening its long-term growth prospects. This strategy has contributed to improved profitability metrics, including a targeted return on tangible common equity of 17-18% post-asset cap removal. Business Streamlining Efforts by Other Financial FirmsIn November 2025, The Goldman Sachs Group, Inc. GS reached an agreement with ING Bank Slaski to divest its Polish asset management firm, TFI. The deal, targeted for completion in the first half of 2026 pending regulatory signoff, will end Goldman’s presence in the Polish retail investment market while cementing ING’s long-term ambitions in the region.GS acquired control of what is now Goldman Sachs TFI through its 2022 takeover of NN Investment Partners. By selling its stake now, Goldman sheds its majority exposure in a mature but relatively small asset-management market — likely freeing up capital and management bandwidth for other priorities.In September 2025, HSBC Holdings PLC HSBC agreed to sell its retail banking business in Sri Lanka to Nations Trust Bank PLC.This divestiture is part of broader streamlining efforts by HSBC announced in October 2024 to enhance operational efficiency. This enables the bank to strengthen its market share and leadership in areas where it has a competitive edge and an opportunity to boost and support its clients.WFC's Price Performance and Zacks RankShares of WFC have gained 16% over the past six months compared with the industry’s growth of 18.1%.Image Source: Zacks Investment ResearchThe company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks