The Boston bank took an $80 million pretax charge for its Aug. 31 acquisition of Robertson Stephens & Co. and another $65 million pretax to realign its emerging markets businesses and New England branch network.
But analyst Henry C. Dickson of Salomon Smith Barney said "they absorbed a lot. As tough a quarter as it was, they did better than expected."
The bank this week said it would reorganize emerging-markets units, closing offices and firing 100 employees in Asia and eliminating another 14 positions on the trading desk in Boston.
"We will continue to take forceful actions as we recently did in our Asian and Boston-based emerging markets businesses so that we can focus on our competitively advantaged activities and reduce the level of earnings volatility," said Charles K. Gifford, chairman and chief executive officer.
Larger money-center banks like Bankers Trust Corp., J.P. Morgan & Co., and Citigroup are also expected to announce job cuts. Analysts said those announcements, reflecting revenue difficulties in capital markets groups, could come with earnings reports next week.
"When you can't get revenues you have to go after expenses," said Diane B. Glossman, an analyst at Lehman Brothers.
BankBoston's trading activities resulted in losses of $52 million, compared to a gain of $20 million in the year-earlier period.
September revenues for BancBoston Robertson Stephens were equal to expenses. Analysts said they expect similar results for the fourth quarter because of the decline in initial public offerings.
"This is the downside pain of the Robertson Stephens deal," said Michael Mayo of Credit Suisse First Boston. "It's a reminder that these acquisitions need to go through several stress tests."
Overall fee revenue fell 14%, to $385 million, though last year's third quarter included a $68 million gain from the sale of Fidelity Acceptance Corp., a finance company. This quarter included a $20 million writedown on an equity investment in a Korean merchant banking company.
Loans grew 7%, to $45.7 billion. Commercial loan growth in the U.S. was a particularly strong 21%. Loans to hedge funds totaled $30 million during the quarter. All but $5 million was paid off in October, the bank said.
The third-quarter provision for credit losses was $60 million, up from $40 million, and net credit losses totaled $59 million.
Expenses rose 30%, to $786 million, largely because of bonuses paid to Robertson Stephens executives as part of the acquisition.
