After heavy subprime mortgage losses, Wells Fargo has announced the closure of the Finance Division. This move will chop about 3,800 jobs from the 14,000 person division. Wells Fargo will nevertheless offer line-of-credit loans and other financial products — just not through a separate division.
Source of article: Wells Fargo to shut down Finance Division by Personal Money Store
Wells Fargo Finance Division
Open for over 100 years, Wells Fargo Finance has operated separately from Wells Fargo Banking. The Finance Division has been responsible for providing small loans, large loans, auto financing and mortgages. With $ 24.7 billion in real estate loans in the Wells Fargo Finance Division, only $ 1.5 billion of them are “prime”. On-level with other lenders, the Wells Fargo Finance Division only lost about 4.6 percent of value in the last quarter.
The Wells Fargo merger with Wachovia
In 2008, Wells Fargo started a merger with smaller lender Wachovia Bank. Wells Fargo brought in liabilities also as branches. There are about 6,600 branches of Wells Fargo/Wachovia banks and an additional 2,200 Wells Fargo Home Mortgage offices. The takeover of Wachovia was forced by government regulators, who wanted to ensure that Wachovia bank would not fail. As a separate entity, Wachovia was dissolved in March of 2010.
Wells Fargo plans on continuing to lend money
The Wells Fargo bank branches will nevertheless be providing services for customers who are borrowing money. Auto loans and fast personal cash loan will now be offered inside Wells Fargo branches. The Wells Fargo mortgage loan business is going to be focusing more on loans backed by the Federal Housing Administration. These federally backed housing loans are less likely to default, in theory. The company will continue to service the $ 22.3 billion dollars in personal loans and auto loans.
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