Wells Fargo & Co., the fourth-largest U.S. bank by assets, said it will eliminate 3,800 jobs, or about 1.4 percent of its total workforce, and close its consumer finance unit.
The lender will take a charge of $185 million, with $137 million, or 2 cents a share, in the second quarter, the San Francisco-based company said Wednesday in a statement. Wells Fargo will close 638 independent consumer-finance branches and stop making subprime home loans, the statement said.
"The economics of a separate Wells Fargo Financial channel are no longer viable, especially now that our customers have access to the largest banking and mortgage store network in the United States," David Kvamme, president of the unit, said in the statement.
Alanson Van Fleet, a Wells Fargo spokesman, said Wednesday evening that the company didn't yet know how many employees might lose their jobs. He said the 14 Wells Fargo Financial stores in Minnesota would close over the next 30 to 60 days; each store typically has five or six workers. Many of those employees likely will find work in Wells Fargo banks or mortgage operations, Van Fleet said.
Nationwide, about 2,800 Wells Fargo Financial positions will be affected by the closings, Van Fleet said. The employees will get a 60-day notice, followed by a severance package based on the number of years they worked at the company and the amount of money they make, he said.
Another 1,000 positions are expected to be eliminated in the next 12 months from the Wells Fargo Financial headquarters in Des Moines, Van Fleet said. The company currently has about 13,000 employees in Des Moines, he said, many of whom work in the company's growing mortgage and credit card operations. He noted that the company now has 410 open jobs in Des Moines.
"We're very hopeful as many team members as possible find jobs within Wells Fargo," Van Fleet said.
Wells Fargo, which purchased Wachovia Corp. for $12.7 billion in 2008, is the top U.S. mortgage lender. Auto, home and credit-card loans will continue to be made from retail branches, according to the statement.
