Aside from the presumed hit to local banking, the pending $6 billion purchase of Baltimore-based, 240-branch Mercantile Bankshares Corporation by the Pittsburgh-based, 843-branch PNC Financial Services Group Inc. entails inevitable “consolidation” and cost-cutting.
And that usually means some branch jobs will be on the line.
Mercantile has about 60 branches in the Baltimore area.
“We?re looking at about $100 million in cost-saves,” said PNC spokesperson Fred Solomon. “We expect about 50 percent of that to be personnel-related. … It?s kind of premature to say [who?s] going to go [but] I can tell you this: that customer-facing employees are one of the critical assets that Mercantile brings to PNC. … And because they are important to us, we want [them] to remain where they are to the extent possible.”
Asked how PNC might go about deciding who to cut, Dean Silverman, president of banking consultancy firm John Ryan International, said, “they would look first for redundant functions ? functions that are done better at [PNC] headquarters.”
Such initial culling of Mercantile?s corporate headquarters operation would then be followed by analysis of any branch overlap, Silverman added, and a look at underperforming branches.
“Regional overlap is critical [to cutting decisions],” he said, “but you?re not going to find a lot of that in this case, I don?t think.”
Solomon concurred.
“One of the reasons that a company like Mercantile would agree to sell to a company like PNC,” he said, “is that there was minimal branch overlap, and that means that those employees in those branches are part of what you get for the money.”
But then there are the regulatory hurdles that such an acquisition represents ? considerable in this case because Mercantile Bankshares encompasses 13 community banks throughout the mid-Atlantic region, some state and some federally chartered ? and the opportunity for activist community opposition before the deal?s projected early 2007 closing is ample.
Asked if his organization will be scrutinizing PNC?s regulatory application process, National Community Reinvestment Coalition President John Taylor responded, “Oh, yeah … our members in these various markets will definitely be looking at that.
“The key is going to be that they make clear what their intentions are regarding investments, bank branches,” he added, “and what it means for the various communities.”
