In 1997, banks showed they are getting better at presenting their mergers to the public.
Acquirers became increasingly vague about such painful aspects of their as job losses and branch closings, while emphasizing more community- friendly things like establishing charitable foundations in the target bank's hometown.
National City Corp. and First Union Corp. both agreed to create such charities when they announced major acquisitions late last year.
The emerging use of charitable foundations to help communities swallow the bitter pill of losing their locally owned and controlled bank was one of the most noteworthy sidelights to bank mergers last year, wrote Edward Herlihy and partners at the law firm of Wachtell, Lipton, Rosen & Katz.
"Broader commitments to the target company's headquarters city . . . have become common," the Wachtell lawyers wrote.
CEOs have found these foundations useful as a way to counter some of the bad press they receive when announcing mergers, which invariably mention the number of bank employees likely to lose their jobs due to the merger.
Last March, First Bank System Inc. announced that 5,000 employees would likely lose their jobs in its merger with U.S. Bancorp, but no bank has offered such explicit numbers ever since.
CEOs such as NationsBank's Hugh L. McColl, First Union's Edward E. Crutchfield, and National City's David A. Daberko, typically say on the day mergers are announced that they don't yet know how many people will be fired.
First Union has come under political pressure in the wake of its acquisition of CoreStates Financial (see article, page 19A). Legislators in both Philadelphia and nearby New Jersey have threatened action against First Union over job losses in the area.
A New Jersey state senator says he may induce the state to stop using First Union for banking, and a Philadelphia councilman introduced a bill to bar First Union as a depository for city funds.
The Wachtell Lipton report noted that banks were making "broader commitments . . . to the target company's employees (in the form of enhanced severance or special bonus pools).
The report added: "It has become customary in large strategic mergers for senior managers of the target to be offered multiyear employment agreements with the acquirer (so-called 'ladders') in lieu of and sometimes in addition to, the protections which are already afforded them."
