Wells Fargo to Lay Off 3,800 Employees, Leave Non-Prime Space
In a restructuring of its financial division, Wells Fargo (WFC) said it will eliminate 2,800 positions in the next two months and another 1,000 people by the end of the year. The bank will close 638 financial stores in the US as it will stop originating non-prime portfolio mortgage loans. The other consumer and commercial loan products through Wells will be realigned with other business units in its banking network. Less than 2% of Wells real estate loans were originated in its financial stores in Q110. David Kvamme, president of Wells Fargo Financial said the economics of a separate Wells Fargo Financial branch is no longer viable after the 2008 merger with Wachovia. From that deal, Wells pushed its community bank stores to 6,600 and its mortgage locations to 2,200. The restructuring will not affect community bank or home mortgage stores in operation. FHA home loans, auto loans and credit cards offered by Wells Fargo Financial will be consolidated with other products and will be offered through the community banks, mortgage stores and its website. The restructuring will cost Wells roughly $185m with $137m of it recorded in the Q210 report due out this month. The rest of it will be charged in the second half of the year with most of the remainder coming in Q310. For the remaining 10,200 members of the Wells Fargo Financial staff, they will be reassigned to other businesses in the company. “We know that this decision will be extremely difficult for those dedicated team members and their families who will be affected,” Kvamme said. “We have already identified positions for thousands of our employees and are committed to finding new positions for as many impacted team members as possible.” Write to Jon Prior.