Wells Fargo & Co. has decided to scale back its original plans for branch consolidation from its April 1 merger with First Interstate Bancorp.
During the hostile takeover battle, word that the San Francisco-based company planned to close 350 branches in southern California became a powerful argument for opponents of the deal.
Out-of-state "white knight" First Bank System Inc. stated it had no plans to close any California branches if it had acquired First Interstate. And Wells' adversaries seized on that difference to argue that a First Bank acquisition of First Interstate would be better for the California economy.
As it turns out, Wells will be shuttering only 259 branches. all but 87 of them from First Interstate.
In addition, the Justice Department, citing antitrust concerns, is requiring Wells to divest 61 branches, more than twice the bank's initial projections.
Still, the bank has decided to close 30 fewer branches than originally planned. Wells spokeswoman Kim O. Kellogg said that of the 30 escaping the ax, 24 will undergo a reduction in operations.
She said that Wells is sticking with its initial projections for cost savings - $500 million a year, beginning 18 months after completion of the deal.
Wells plans to close an initial batch of branches on July 27, and the final group on Aug. 10.
After the divestitures, which are expected by Sept. 1, Wells will have 1,050 branches in California and 737 branches in 12 other western states.
All First Interstate checking and savings account customers in California are to be converted to Wells products by the time the closings end.
There are 2,000 full-time positions that will be eliminated in the branches. Some employees will be asked to stay until September 1, and others until yearend, to help with the transition. Wells plans to eliminate a total of 7,200 positions. More than 1,700 of the pink slips were distributed when the deal closed.
In a related development, Wells has also decided to keep nearly all of First Interstate's securities processing operations, boosting a business the acquiring bank had all but exited.
When combined, the business - serving as trustee for municipal and corporate bonds and as custodian and record keeper for pension and 401(k) plans - will employ 425 people and administer $145 billion of assets.
The function is to be based in Los Angeles, in a division called institutional trust. The division will be overseen by senior vice president Amru Khan, who had similar responsibilities at First Interstate.
Wells is especially excited about getting the bond trustee business, said Mr. Khan's boss, executive vice president Michael J. Niedermeyer.
Wells had sold its own bond trustee business in 1983, because of feeble returns and market share. But First Interstate is the largest municipal bond trustee in California, and No. 2 nationally, servicing bonds with a market value of $75 billion.
