Wells Fargo plans to shutter its 638 Wells Fargo Financial offices in favor of direct lending via the Wachovia branch network it acquired in 2008. As part of the closure, Wells Fargo will lay off 3,800 employees in the next year.
The 100-year-old Wells Fargo Financial unit had been originating auto loans, subprime mortgages, and credit cards. Instead, Wachovia branches will originate auto and credit card loans, as well as mortgages guaranteed by the Federal Housing Administration.
Wells Fargo Dealer Services, the bank’s indirect lending unit, will remain unaffected by the restructuring.
As of March 31, Wells Fargo Financial had $14.7 billion of auto loans and $7.6 billion of unsecured and credit card loans in its portfolio. Of the unit’s $24.7 billion of real estate loans, $23.2 billion were subprime.
Wells Fargo will record a $185 million charge related to the closings.
