Of all the mergers and acquisitions proposed in the past two months, none seem to have hit employee morale like the planned purchase of Beneficial Corp. by Household Inc.

Household, which has a reputation for wringing value from acquisitions through ruthless cost-cutting, has promised $450 million a year in savings. The news has employees at Beneficial fearing the worst.

In Internet chat rooms, over the phone, and via e-mail, employees have been pouring out their woes about job security and salary cuts.

"I am a 22-year employee of Beneficial," said one branch manager via e- mail. "All of my 10 employees are very concerned." There is a Household branch in her town, she explained. "I have several single moms working for me and they are very scared."

Another employee said on an Internet message board that "a large number of people have left the company," and that there is a feeling of "panic" among those who remain.

"Has anyone heard what is going on at Peapack?" asked another, referring to the New Jersey town where many of Beneficial's back-office operations are based. "Are they really going to get rid of everyone and close the doors?"

Late Thursday, Household told American Banker that the Peapack, Wimington and Tampa offices of Beneficial would remain open. In fact, at least one will add staff, the company said.

The details are different but the mood is being echoed across the financial services sector, as employees from NationsBank Corp., BankAmerica, First Chicago Corp., and Bank One Corp. contemplate their fate in the wake of merger plans.

The recent wave of proposed megamergers has even the most seemingly secure executives worrying about where they could be next year.

"Financial services is a funny place these days," said a vice president of a finance company that six months ago would never have been a takeover candidate. Now, he said, anything is possible, and he could be out of a job in a year. "There ain't no guarantees," he said.

For some Beneficial employees, the only guarantee seems to be unemployment.

"I'm definitely going to lose my job," said a manager at the company's Peapack division. "There's a lot of stress here," he said. "They haven't set a date" as to when employees will be notified, he said, and "people are just walking around not doing any work."

An April 15 freeze on employee stock options has not helped matters. "Effective immediately, the Benshares Plan is unable to exercise requests," reads an internal memo. "It is inappropriate for the company to trade its own securities at this time," because it can't meet requests.

Employees lose their options if they leave the company, leading some to speculate that the freeze is a ploy to curtail defections.

An article in the Newark (N.J.) Star-Ledger the day after the proposed deal was announced incensed employees. Beneficial chief executive Finn Caspersen was quoted as saying, "I'm not going to be on the unemployment line," in reference to the value of the stock options he owns.

A spokesman for Household said Mr. Casperson's remark was taken out of context.

In any event, "there are a lot of unhappy people here," because of the article, said the manager at the Peapack division.

Beneficial, for its part, is "making all the facts known to all our employees as soon as they become available," said Bob Wade, investor relations specialist for the company. A lot of the panic can be blamed on media reports, he said.

Household's head of consumer operations, Gary Gilmer, and Beneficial's head of branch operations, David Farris, held a teleconference Thursday with key Beneficial managers to try to shed some light on the situation, said Craig Stream, an investor relations specialist for Household.

Details of the conference were not readily available.

"We're talking very personally and specifically to a number of employees," he said, adding that Household employees were on hand to answer questions.

Household is also publishing weekly internal newsletters to update employees, he said.

Beneficial, meanwhile, is offering some incentives to stay.

The company is giving retention bonuses to selected employees in order to convince them to stay until the merger is completed-up to $15,000 for managers and $30,000 for directors, the Peapack manager said.

The practice, though, seems to have incited some controversy, with employees who did not receive bonuses heading for the door. "It seems everyone but" district managers' assistants are receiving bonuses, the husband of a Beneficial assistant said in the Internet chat room. "What a slap in the face," he said. "My wife is really disappointed and bitter about this."

On the executive level, though, "most people are not running to get out their resumes, even though they are sure they are going to lose their jobs," said Cathy Weiss, president of C. Weiss & Associates, a Manhattan- based headhunter specializing in finance companies. "They're too busy making the merger work," she added.

Regardless, many at the managerial level of Beneficial said the merger signaled the end of an era for a company that originally had a paternalistic reputation.

"It's just that the times are changing," said the Peapack manager. When he first joined the company 20 years ago, he interviewed with the president, and "all he was worried about was whether or not I had enough time to get a full pension," he said. "Where companies used to worry about people, now they worry about earnings per share."

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