| -

DES MOINES, Iowa — Auto Remarketing learned that Wells Fargo Financial is in the process of restructuring, which includes closing 638 stores named for this division.

Auto loans previously offered by Wells Fargo Financial will be mixed in with other similar products offered by the company and will be available through the financial institution's network of community banking stores, mortgage stores, phone banks and wellsfargo.com. Wells Fargo Financial offered direct to consumer auto lending.

A big part of the restructuring includes ceasing non-prime mortgage loans.

So what do the closings mean to employee count? A total of 2,800 positions out of 14,000 members at Wells Fargo Financial are expected to be eliminated over the next 60 days as a part of the move. Also, another 1,000 positions will likely be cut within the next year. The remaining associates will be reassigned to other Wells Fargo businesses.

Explaining the decision, management said that due to the 2008 merger with Wachovia, Wells Fargo's customers have access to 6,600 Wells Fargo and Wachovia community bank stores and 2,200 Wells Fargo Home Mortgage locations. The prominent presence of so many stores means that the there is no longer a need for a separate network of Wells Fargo Financial offices, according to the management team.

The company expects the consolidation to lead to increased operating efficiencies, streamlined processes and controls, as well as a more consistent experience for customers.

"Our network of U.S.-based consumer finance stores, which have historically operated as an independent sales channel from our bank operations, have served customers well for more than 100 years, but 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" explained David Kvamme, president of Wells Fargo Financial.

According to management, the restructuring of Wells Fargo Financial will not impact the number of community banking or home mortgage stores already in operation. Also, customers with existing Wells Fargo Financial consumer loans will continue to be served without disruption.

Wells Fargo Financial's commercial businesses will be realigned with business units within the financial institution over the next year. Commercial businesses will continue to be served without disruption.

As a part of the restructuring, the company will rack up pre-tax charges of about $185 million, with $137 million, or 2 cents per common share, recorded in the second quarter of 2010 for severance costs.

The remaining charges are expected to be recognized in the second half of 2010, primarily in the third quarter, the company noted. Once the changes go into effect, the company expects that the cost savings will offset the restructuring charges within the first year and a half.

Auto Remarketing reached out to Wells Fargo for comment on the latest move; however, as of press time no response was forthcoming.

Editor's Note: The restructuring will have no impact on Wells Fargo Dealer Services. To see our follow-up coverage on this news, please visit www.subprimenews.com/spn/news/story.html?id=1523.