400 Branch Cuts Called Possible

Combining BankAmerica and Security Pacific will result in the loss of 10,000 to 15,000 jobs, the closing of 300 to 400 branches, and the consolidation of four computer centers into one or two sites, analysts predicted Tuesday.

In announcing the agreement Monday, the two companies' top managers said that the merger would lead to $1 billion in expense cuts after three years. But they have declined to specify how many jobs or branches would be eliminated to help achieve those savings.

Analysts said Tuesday that the $1 billion reduction, equal to 13.5% of the companies' combined expenses, is not only attainable but probably conservative.

Cost Cuts |Achievable'

"It is achievable and the company is hinting it could be even more," said Olivia Asher, bank analyst at Merrill Lynch & Co. "There are tremendous overlaps and capacity that can be taken out."

The banks have about 94,000 employees and 2,400 branches in total.

According to analysts' initial estimates, 10% to 16% of the work force will be cut. In addition, 12% to 17% of the branches figure to be closed, mostly in Washington and California, where the overlap is largest.

"The cost-cutting is the most critical thing about these big mergers," said Robert B. Hedges, vice president of the MAC Group, a consulting firm in Chicago. "If it is not done properly, the bank loses credibility with Wall Street."

Many BankAmerica and Security Pacific executives have come from Wells Fargo & Co. That bank's acquisition of Crocker National Corp. in 1986 has served as a model for cost cutting in a consolidation. Some of these executives "played key roles in that consolidation and know how the game is played," Keefe, Buryette & Woods analyst Donald Crowley wrote in memo.

About half of the companies combined expenses last year - or $3.66 billion - came from salaries and benefits. That is where most of the savings is expected to come from.

Many Job Cuts Anticipated

Heavy staff cuts are likely in branches and administrative and back-office areas, such as data processing, human resources, marketing, and public relations. The combined entity will also need fewer corporate lending officers.

A reduction of 10% of the 94,000 employees of the combined bank would produce a cost savings of about $366 million. A staff reduction of 14,000, or 15%, would save about $546 million.

"It is important that they have explicit goals in each category," said Mr. Hedges. "They can't try and go after everything at once. It is a trap that [bank] executives have to resist," he said.

While branch closings and front-office staff reductions will play a large role, the back office offers the largest single benefit to consolidation.

Sharp Scalpel on Technology

Technology projects will be scuttled and data centers closed as Bank of America combines systems and operations. The bank estimates that it will save from $300 million to $500 million over the next three years through consolidation of computer systems and other support functions.

Each bank currently has two main data centers: Bank of America's are in Concord, Calif., and Los Angeles; Security Pacific's are located in Brea, Calif., and Seattle. Each bank also has numerous back-office sites for check processing and customer service.

Analysts believe at least two of the four data centers, most likely one in the Los Angeles area, will be consolidated into a single center. Another center outside of San Francisco's earthquake zone could very likely serve as a backup site.

It appears that more of Bank of America's systems will survive the cuts, observers said. Richard M. Rosenberg told analysts on Monday that about 30% of Security Pacific's systems are superior to Bank of America's. Bank of America's top technology executive, Martin A. Stein, will head the computer operations. Mr. Stein's technology unit, called BankAmerica Systems Engineering, or BASE, has 4,000 employees.

Conservatism to Endure

BASE has concentrated on investing in the basics, such as branch automation and communication networks. The bank has been conservative, eschewing expensive, unproven technologies embraced by Security Pacific, such as high-speed imaging systems and artificial intelligence.

With Mr. Stein calling the shots, it is not clear what, if any, role SecPac's highly regarded technology chief John Singleton and other senior Security Pacific technology executives will play in the merged bank.

"There was some question about where his star was headed [prior to the merger]," sa)d George Rusznak, head of the banking-industry practice for CSC Index, Cambridge, Mass.

Mr. Rusznak said Mr. Singleton may be on his way out. A Security Pacific spokeswoman said the bank had no comment on his status.

Mr. Singleton, one of the highest-paid banking technology executives in the country, was one of the few technologists in the industry to rise from the data-processing department to achieve the rank of chief operating officer in early 1990.

In terms of branches, Security Pacific and Bank of America have tremendous geographic overlap, especially in the more populous states with the largest number of offices such as California and Washington.

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