Wells Fargo Looking at Paying Depositors More: Goldman Update

Wells Fargo & Co. Chief Executive Officer Charlie Scharf said the bank is working to find the right balance of how much to raise the rates it’s paying depositors while protecting the firm’s profitability.

The lender sees increasing rates on deposits more as a tool to retain “franchise customers” than a way to attract new clients, he said Tuesday at the Goldman Sachs U.S. Financial Services Conference in New York. The bank is studying how customers at different levels of affluence and deposit concentrations react to rate changes as part of its evaluation, he said.

“There is a deep analysis that you need to do about how much can you get away with in terms of not passing on rate in the shorter term versus what do you lose in the longer term for just not treating customers properly,” Scharf said.

Solomon Says Pay to Fall as ‘Bumpy Times Ahead’

Goldman Sachs Group Inc. CEO David Solomon sees “bumpy times ahead” for the global economy, meaning compensation will decline from last year’s levels.

“You have to be a little bit more cautious,” Solomon said in a Bloomberg Television interview Tuesday.

Last year “was an exceptional year for the firm,” Solomon said, adding that 2022 is a “different year and so naturally compensation will be lower.” But he added that he’s surprised by how resilient the competition for talent is.

While the bank’s economists expect the U.S. to avoid recession next year, he said he’s a little more cautious on the outlook.

Goldman Sachs Still Feeling Pressure on Expenses

Goldman Sachs is still experiencing pressure on expenses, Solomon said, highlighting the growth in non-compensation costs.

The firm is facing a tricky balancing act to keep a lid on total spending while rewarding its top performers in a very competitive market for top talent, Solomon said at the firm’s U.S. financial-services conference in New York Tuesday. Compensation costs are the biggest item in Goldman’s expense line.

Goldman has been cutting costs to protect profits from a costlier-than-expected foray into consumer banking as well as the global economic slowdown, which is taking a toll on dealmaking.

—With assistance from Sonali Basak.

Sridhar Natarajan and Kevin Orland report for Bloomberg News.