The merger may have been the easiest part of the deal.
Wells Fargo & Co. on Wednesday won a corporate shootout with rival First Bank System Inc. for control of First Interstate Bancorp with a hostile $11.6 billion bid that is the richest ever in banking history.But now comes the hard part - the consolidation of the two banks. While the deal is a boon to shareholders, it's not too popular among employees, thousands of whom will lose their jobs when the combined company closes 350 bank offices in California.
"Jobs are certainly an issue, I won't sugarcoat it," Paul Hazen, the chairman of Wells Fargo, said during a news conference in Los Angeles.
Regarding First Interstate's operations in Utah, a spokesman in Los Angeles said it was too soon to predict what impact the merger will have on the bank's 32 branches and some 330 employees in the state, where Wells Fargo currently does not operate.
The spokesman said executives of both Wells Fargo and First Interstate will hold talks in coming weeks that will eventually clarify the situation.
Hazen and First Interstate chairman William E.B. Siart said it is too early to say which branches would close or what regions might be hardest hit. Without elaborating on the exact number of jobs to be cut, Hazen said the layoffs would be spread between both banks.
Analysts had guessed the figure at 7,000, but both said that number is too high.
To balance out the job losses, Wells Fargo has pledged that it will commit $45 billion in loans and investments to low-income areas in the next 10 years, estimating that will create 715,000 jobs.
The newly combined bank will have dual headquarters in San Francisco and Los Angeles - Wells Fargo currently is based in San Francisco and First Interstate in Los Angeles. More board meetings will be held in Los Angeles in the future to emphasize Wells' commitment to Southern California, Hazen said.
Of the 1,389 combined branches in California - Wells Fargo has 983 and First Interstate has 406 - about 350 will close, Hazen said.