What Wells Fargo's Move Really Means

Wall Street Whispers: What Wells Fargo's Move Really Means


It's just going to charge more for deposits, stop making risky loans and stop maintaining the employees and branches that it uses to achieve that end. For investors this is a good thing; for consumers it's a bad thing; and for the company and broader banking industry it's a sign of the times.

As of July 1, Wells Fargo began implementing a $5 monthly fee for basic checking accounts that fall below a $1,500 minimum balance. On Wednesday the San Francisco-based bank also announced plans to "restructure" its consumer-finance business by shutting down the Wells Fargo Financial division that has been operating for roughly a century.

As a result, Wells will stop originating subprime mortgages that were once part of the division -- something it indicated in regards to auto finance months ago -- and merge the rest of the division into the broader franchise. The change will result in 638 branch closures and up to 3,800 layoffs. Investors will see near-term charges of $185 million, or less than 3 cents per share, before taxes, which will be offset by cost savings by mid-2012.

Comment: Avoidance of the checking account fee is EZ (check the Wells website). Getting out of subprime is a sign of the times!

No comments:

Post a Comment

Any anonymous comments with links will be rejected. Please do not comment off-topic