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Deals May Result in as Many as 18,000 Job Cuts

April 14, 1998|From Bloomberg News

As many as 18,000 jobs could be lost as the result of NationsBank Corp.'s merger with BankAmerica Corp. and Banc One Corp.'s acquisition of First Chicago NBD Corp., mostly in technical and support staff.

"The biggest overlap will be in finance, treasury, compliance, systems, operating activities and administration," where "you just don't need the extra people," said Peter Crist of Chicago-based recruiting firm Crist Partners.

NationsBank and BankAmerica's merger into the second-largest U.S. banking institution could mean as many as 8,000 job cuts, BankAmerica Chairman David Coulter said. Analysts said 10,000 additional jobs could be lost as a result of Monday's agreement by Banc One to acquire First Chicago. Banc One declined to estimate job losses.

Cost-cutting is one of the driving forces behind the mergers sweeping the financial services industry. NationsBank and BankAmerica expect to save $2 billion, partly from job cuts representing as much as 4.4% of the 180,000 positions at the combined company.

Some of the pain--as many 300 jobs--will come in the banks' newly acquired investment banking units, headhunters say.

Last year, BankAmerica bought San Francisco-based Robertson, Stephens & Co., a small securities firm specializing in technology and health care. It has about 1,000 employees in corporate finance, sales, trading and research and investment management.

About the same time, NationsBank purchased Montgomery Securities, another San Francisco-based investment bank focused on young, rapidly growing companies in health care, media, technology, telecommunications and financial services. It has about 1,680 workers, but that doesn't include the 1,020 who work in investment banking at NationsBank, according to a Montgomery spokeswoman.

Overlap between BankAmerica's and NationsBank's securities units exists largely in technology, health-care and consumer businesses. Sales, research, trading and support staff make up the rest, headhunters say.

"They have two investment banks to squish together, and that won't be very pleasant," said Roy Smith, a professor of finance at New York University and a former Goldman, Sachs & Co. partner. Many people may leave voluntarily, he said.

Cash management, a service that helps companies manage their money, is another area of overlap for Charlotte, N.C.-based NationsBank and San Francisco-based BankAmerica, said BankAmerica's Coulter.

Jobs are also likely to be slashed in corporate banking. In retail banking, however, there is little duplication between the two companies, recruiters said. "If you define corporate banking as catering to the growing middle market [in the U.S.], there is a lot of overlap," Crist said.

Internationally, there isn't much duplication, as BankAmerica has a much bigger business overseas.

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