Financial News: Why is Wells Fargo Restructuring?

Since acquiring Wachovia in 2008, Wells Fargo has expanded its banking centers to offer more banking centers of any bank in the nation. However, Wells Fargo will soon be shuttering more than 600 of its financial stores in order to streamline operations.

More than 6,000 Wells Fargo bank stores and 2,200 Wells Fargo mortgage branches will still remain open to service established and new customers. The cost to restructure is estimated at $185 million, but the savings will more than pay for the restructuring within 18 months.

Nearly 4,000 positions will be eliminated in 2010 but Wells Fargo says that it has taken steps to ensure that as many employees as possible will have different positions within the company. In a company statement, Wells Fargo reports that it has already located appropriate jobs for “thousands” of its employees and is committed to helping every affected employee in these hard times.

Wells Fargo has the most mortgage and banking centers in the country, despite the major restructuring. Between January 2009 and July 2010, the company modified more than 500,000 mortgages for customers in need of payment assistance during the recession. The company was able to offer help via reduction of interest rates and changing the principal amounts.

To date, the company has reduced principal owed by over $3 billion for customers in need. Of all the major Home Affordable Modification servicers, the Homeowners HOPE hotline received the fewest consumer complaints about Wells Fargo.

One major change is that Wells Fargo states it will no longer offer non-prime portfolio mortgages. The company is streamlining and tightening operations to ensure a robust company. How this will affect existing customers remains to be seen.