Every deal has a downside.
Following Pittsburgh-based PNC Financial Services? acquisition of Mercantile Bankshares, the company announced grand plans for an extensive rebranding campaign targeted for completion by 2007. But amid the new signs, logos and management strategies being implemented, PNC decided to eliminate “several hundred” positions in Maryland late last week.
“With an integration, it?s a very common process,” said Jaime Peters, an analyst for Morningstar who covers PNC. “We expected cost savings out of the [Mercantile] acquisition, and this is where it?s coming from.”
PNC will offer severance packages and the chance for some of the displaced workers to relocate to one of the company?s more than 200 open positions throughout the Baltimore region. Because it is unknown which options employees will choose, it was impossible for PNC to estimate an accurate number of jobs that would be lost.
Reasons for the downsizing are mostly attributed to the overlap of existing positions. Back-office jobs such as call center operators and centralized operating positions are the jobs in the most jeopardy, as PNC maintains its stance of trying to keep as many tellers and branch directors in place as possible.
“We have a special emphasis on retaining the positions that face people,” PNC spokesman Fred Solomon said. “These actions are always difficult, but they are part of business, and whenever we make an acquisition, we try to handle them with as much thoughtfulness and sensitivity as we can.”
This restructuring is expected to save PNC about $100 million a year in operating costs, following an estimated $40 million in various merger costs and severance packages, the Pittsburgh Tribune-Review reported.
And while PNC is changing its staff, the company also has elected to change its home. Along with property manager Vornado-Charles E. Smith, the bank will develop, lease and manage a new 350,000-square-foot building in Washington.
Announced late last week, this new building will serve as PNC?s regional headquarters, as well as the home to several other tenants.
