US Bank Imposes More Layoffs Claiming It Is Reducing Resources In Areas That Continue To Be Slow
US Bank imposes more layoffs and has told media sources that the layoffs in its mortgage division will happen this week.
The announcement follows a decline in its mortgage originations in the first quarter of 2023. US Bank is also expected to release it’s the second-quarter earnings this week.
The current jobs cut also comes amid rumors that lenders are adapting to the residential mortgage capital requirements under the Basel III regulations.
However, the US Bank spokesperson did not reveal the number of employees that will be affected.
The US Bancorp subsidiary was #4 among mortgage originators in the United States in the first quarter of 2023.
However, mortgage volume has been in free fall at the bank. The bank’s total mortgage origination volume reached $9.6 billion from January to March. This down 41.7% year over year.
The bank is also trying to maintain a balanced portfolio between retail and correspondent lending. From January to March, the bank originated a $4.47 billion volume in the retail channel and $5.8 billion through the correspondent channel.
U.S. Bank would be affected by new residential mortgage capital requirements under the Basel III rules. Bloomberg reports that the banks are expected to release Basil III rules on July 27th. The latest draft proposal states risk weights of 40% to 90% would be assigned for large banks. However, this depends on the loan-to-value ratio. The current rule sets a 50% risk weight on most first-lien residential mortgages.
The bank announced in December 2022 that it would close the wholesale mortgage businesses it acquired from MUFG Union Bank.
US Bank closed on the acquisition of MUFG’s core regional banking franchise from Mitsubishi UFJ Financial Group in December 2022.
The spokesperson also said the layoffs are not related to or specific to MUFG Union Bank.