Workers at Chase Manhattan Corp. and J.P. Morgan & Co. may be breathing easier now that the chief executives of both companies have gotten more specific about job cuts that will come as a result of their merger.
At a press conference Wednesday in London, William B. Harrison Jr., chairman of Chase, said about 3,000 people would lose their jobs after the planned $33 billion acquisition of Morgan. The deal, which was announced last week, would create a $667 billion-asset company with 95,000 employees worldwide.
Mr. Harrison and his Morgan counterpart, Douglas A. Warner 3d, had not been specific until now about the scope of the potential layoffs, though they had repeatedly said that the deals success was pinned to revenue growth, not cost-cutting.
Announcing the deal last week, Mr. Harrison said about $500 million of the $1.5 billion in cost savings expected from the combination of the two companies would come from job cuts.
Observers have speculated that, based on other recent mergers in the financial services industry, Chase could slash as many as 10,000 jobs, roughly 10% of the combined work force. That would be in keeping with the recent wave of cost-cutting in banking circles, much of it at companies that were involved in mergers two years ago.
For example, Bank of America Corp. said in August that it would cut 10,000 jobs, or 7% of its work force, in an attempt to scale back its senior and middle management ranks. The Charlotte, N.C., company was formed two years ago in the merger of BankAmerica Corp. of San Francisco and NationsBank Corp. of Charlotte. More than 20,000 people have lost their jobs at the company so far.
Analysts said the potential for cost savings in the Chase-Morgan deal, however, is outweighed by the promise of additional revenue that would come from marrying Morgans greater array of products with Chases broader client base. The companies estimated that there would be $400 million of net revenue gains from the combination.
The acquisition would add substantially to many businesses that Chase has been trying to build on its own or through smaller deals including equities underwriting, equity derivatives, and asset management and give it a bigger base of operation in Europe, where investment banking and corporate banking are fast-growing businesses.
It allows Chase to get to some points faster, said Henry C. Dickson, an analyst at Lehman Brothers. Theres a little less risk involved.
Mr. Harrison and Mr. Warner have spent much of their time in the past few days meeting with groups of employees from both companies to explain the deal and pump up enthusiasm. They have said that there is little overlap between Chase and Morgan outside the asset management and investment banking groups, in which most of the cuts are expected.
At the press conference, the executives said the cuts would amount to less than 10% of the asset management and investment banking groups employee rosters about 32,000 worldwide. The vast majority of the other Chase workers support its consumer banking operations, which do not overlap with Morgan.
A spokesman for Chase in New York confirmed Mr. Harrisons statements, which were first reported by wire services in London.