Wachovia Corp. has joined the banking industry's cost-cutting craze, even though it's already one of the most efficient banks in the nation.

Executive vice president Walter Leonard, who heads the company's operations subsidiary in Atlanta, is in charge of a team of executives searching for management overlap and redundancies in Wachovia's three-state operation.

The three-month review, scheduled to be completed by mid-April, is expected to result in some employee layoffs.

"Overall, we would expect to have a lower-cost, more efficient organization, and that means probably fewer jobs," Mr. Leonard said in an interview Monday. "How we get there, whether that's through attrition or redeployment or whatever, has not been determined."

The review targets only salaried managers; hourly employees are not affected. Andersen Consulting has been hired to assist in the effort.

News of the review came to light last week in the Charlotte Observer, which had obtained an internal memo written by Mr. Leonard and dated Jan. 11.

According to the Observer, the memo said the review will focus on "management positions within every Wachovia subsidiary, business function, and support area."

It said the company aimed to "improve productivity, eliminate redundancies where possible across state and functional levels, dissolve unnecessary boundaries between business lines, and support a customer- focused sales organization."

Wachovia's efficiency ratio, 53.7% at yearend, is already among the best in the industry. It compares, for example, with an average of 61.41% for Wachovia's peer group, the Keefe, Bruyette & Woods Inc. index of 31 regional banks with assets over $25 billion.

Wachovia, based in Winston-Salem, N.C., has $39 billion of assets.

Mr. Leonard denied that the review, and resulting reorganization, is directed at specific expense-saving targets. "We don't have a specific numeric goal of numbers of people or dollars to save or efficiency ratio to hit," he said.

But Wachovia executives had previously signaled to analysts that the company would like to work its efficiency ratio down to 52% by midyear and under 50% within the next three to four years.

Although Wachovia is relatively efficient now, Mr. Leonard said the bank is concerned about the future.

"As we look out, what we see is that the industry is going to continue to be competitive, our customers are going to want more and continually cost-effective high-quality products, and our shareholders are going to continue to want better-than-average returns," he said.

"When you put those together, it says we've got to be more effective and efficient than we've been in the past."

Mr. Leonard's efficiency review comes amid major management changes at Wachovia, which analysts trace to moves by CEO L.M. "Bud" Baker Jr. to put his strategic imprint on the company.

Since he took over the reins from chairman John G. Medlin Jr. last year, Mr. Baker has reorganized Wachovia's retail and corporate banking operations. His biggest move was to create a new general banking division to centralize all retail operations under executive vice president G. Joseph Prendergast in Atlanta.

The changes are "symptomatic of a company that's trying to find the right combination of resources and business opportunities," said Anthony R. Davis, an analyst with Dean Witter in New York.

Mr. Leonard's management-pruning campaign is only the latest major effort at Wachovia to improve efficiency. In 1992 and 1993, the company conducted its "Market Focus" program designed to identify geographic markets that warranted additional investments and those that did not.

As a result of Market Focus, Wachovia reduced its branch network last year by 16 offices to 493.

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