Wells Fargo & Co. completed its takeover of First Interstate Bancorp Monday and immediately laid off 1,750 employees.
Of 45,800 full-time positions at the two banks, a total of 7,200 - or 16% - are to be eliminated by yearend.
Most of those notified Monday were in administrative, or "overhead" positions, Wells Fargo president William F. Zuendt said in an interview. Even though Wells expects to close 85% of First Interstate's California branches, no layoff notices have yet been given to branch employees.
According to a company spokeswoman, 811 of those let go Monday are in California, 399 in Arizona, 192 in Oregon, 118 in Texas, 101 in Washington, 48 in Colorado, 37 in Nevada, 29 in Utah, 9 in Idaho, and 1 in Montana. Ninety-nine of those losing their jobs are from Wells; the rest are from First Interstate. All of the Wells people laid off were working in California.
Mr. Zuendt said that as much as possible, the bank will be run as a single institution, taking advantage of new interstate banking laws that allow combinations of state charters and back office systems.
The bank ranks as the country's eighth-largest, with $116 billion of assets and $89 billion of deposits.
Wells will use its own computer systems in most instances for its 13- state network, even though, to date, those systems have principally operated in California. A conversion of First Interstate accounts to Wells' deposit accounting system is slated for California in the summer, and for the other states in the fall.
Mr. Zuendt said that Wells is taking this approach because it wants to stick with systems it already knows. He said only one major computer system from First Interstate will be retained: the one for consumer loans, which is considered better than Wells'.
Mr. Zuendt also said that Wells may seek to sell First Interstate's relatively small operations in Wyoming, Montana, and Alaska.
Mr. Zuendt said that contrary to rumors, Wells will keep First Interstate's Texas operation.
Mr. Zuendt noted that Wells was unsuccessful in its efforts to keeping several key First Interstate executives, including cash management head Jan Cloyde, California retail head Jaynie Studenmund, retail banking head Linnet Deily, and electronic banking head Dan Eitingon. Mr. Zuendt blamed a sense among many that Wells was the enemy, as well as lucrative change-of- control severance agreements that gave 39 top executives two to three times their yearly salary and bonus, plus the right to immediately exercise stock options.
The severance plan "had a much more negative effect than we would have liked," Mr. Zuendt said.
Mr. Zuendt also responded to criticism from some First Interstate executives that Wells is moving too quickly, and isn't thinking out the merger well enough. Speed, Mr. Zuendt said, is paramount.
"The consequence of moving slowly is that you have that much more time for your competitors to steal your customers away, and that much more uncertainty for employees," he said.
