The Office of the Comptroller of the Currency plans to cut 500 jobs, or 15% of its work force, by the end of 1998.
According to an internal draft memo, the Comptroller's Office is preparing for a possible decline of 800, or 29%, in the number of national banks by 2000. The agency is not satisfied with the gradual "rightsizing" it has been attempting for the past two years.
"OCC will find itself perpetually 'behind the curve' as we attempt to match up our staffing with our needs while remaining within our budget," said the memo to managers. "Only a swift and decisive downward adjustment to OCC staffing will accomplish that."
The 14-page document also warned that a number of variables, including an unexpected acceleration in the rate of industry consolidation, could necessitate even larger staff cuts.
"All employees should understand that managing to the right number and mix of staff will be an ongoing and constantly changing challenge," the memo said.
But for now, the national bank regulator is aiming for 2,835 employees by the end of 1998, down from today's 3,335. OCC will use a combination of resignation incentives and retirement offers to cut 300 next year. About 200 of these work in field offices, the rest in the six district offices or Washington headquarters.
The OCC expects another 200 staffers to leave by the end of 1998 through normal turnover.
As the banking industry consolidates, there are fewer banks paying the fees that feed the OCC's budget. (Agency revenues have been falling since 1994 and are expected to hit $365.1 million this year. Expenses also have been trimmed - to an estimated $364.1 million for 1996.)
Fewer banks also means less work for examiners. The OCC currently oversees about 2,800 national banks. But that has been dropping by about 200 annually, and the memo projected the number could be down to 2,000 by the end of the century.
The memo, dated Sept. 16, was prepared by a task force set up to study future staffing needs. It was presented to OCC managers at a meeting in Detroit last month.
OCC officials Monday tried to put a positive spin on the document, a copy of which was obtained by American Banker.
Leann G. Britton, senior deputy comptroller for supervision operations, said staff cuts are possible in part because bank supervision has improved.
"We are looking for ways we can be even more efficient while at the same time improving the quality of our supervision," Ms. Britton said in an interview.
The OCC will be able to reduce the resources it commits to examining healthy community banks by 25%, Ms. Britton said. She cited several reasons for the reduction, including:
*Congressional permission to examine well-run small banks once every 18 months, instead of annually.
*Streamlined exam procedures for "noncomplex" national banks under $1 billion of assets.
*New Community Reinvestment Act exam procedures for small banks.
*Less paperwork for examiners before and after exams.
Much of the streamlining has occurred in examiners' off-site work, such as pre-exam paperwork and post-exam reporting. Therefore, bankers will not see a 25% reduction in the actual time examiners spend in their institutions, Ms. Britton said.
Under the previous rightsizing plan, the OCC three times a year calculated how many man-hours it needed to supervise the national bank system.
"Every four months everyone would know how many banks disappeared and how much work had disappeared," said Judith A. Walter, senior deputy Comptroller for administration. "The fact that we changed our staffing numbers every four months created enormous uncertainty in the work force. We decided we needed a more holistic approach."
Other regulatory agencies have been facing similar staffing problems. The Federal Deposit Insurance Corp. is planning to cut its total by 3,062, to 6,500, over the next three years. Since the end of 1995, the FDIC has reduced its work force by 29%, or 4,019 employees.
The Office of Thrift Supervision has reduced its staff 60%, to 1,385, since 1990.
