Providing more details of its restructuring effort, Chase Manhattan Corp. on Tuesday announced plans to eliminate 6.5% of its work force, or 4,500 employees, and take a $510 million pretax charge in the first quarter.
The nation's largest banking company, with $365 billion of assets, said the cuts would save Chase about $460 million a year.
It expects to funnel the savings into growth businesses such as investment banking, mortgage servicing, and advisory and global custody services.
Chase hinted in January that it was planning to reduce staff and reorganize certain business units with an eye toward greater efficiency.
But the 4,500 job eliminations announced Tuesday were higher than the 5% reduction, or 3,200 cuts, many industry watchers had expected.
Wall Street applauded the news.
Trading in Chase shares was halted on the New York Stock Exchange for 31 minutes Tuesday afternoon as the bank made its announcement.
Chase's shares rose $6.6875 to close at $135, up 5%.
"They are basically taking stagnant expense dollars and reallocating them to higher growth businesses," said George Bicher, an analyst at BT Alex. Brown.
At a press conference, Chase's president Thomas Labrecque said the restructuring was meant to boost the bank's revenue growth from 8% to 10% annually by 2000. Expense growth will be controlled to under 10%, Mr. Labrecque said.
"What we are announcing today is an expression of confidence," Mr. Labrecque said.
"We continue to drive this franchise in a very disciplined way."
Chase also announced it would boost its quarterly dividend 16%, to 72 cents, and seek a 2-for-1 stock split.
Mr. Labrecque estimated the bank's restructuring would last for 18 months, with the cost savings kicking in early next year.
Analysts said it represented a second phase in the bank's 1996 merger with Chemical Banking Corp.
"Having finished the bulk of the merger, they are looking for more low- hanging fruit," said Robert B. Albertson, an analyst at Goldman Sachs & Co.
About one-third of the job cuts are expected to come from support areas, Mr. Labrecque said. The other two-thirds will come from business lines and cut across the entire bank, he said.
About 2,200 employees will be fired, while the other job cuts will come from attrition, he said. In New York City, about 1,100 jobs will be eliminated, he said. The cuts will likely begin in the second quarter.
Since the merger with Chemical, more than 12,000 jobs have been eliminated through attrition, hiring freezes, and layoffs.
But Mr. Labrecque also said "a substantial number" of new positions would be created in growth businesses.
To help control costs, Chase in January created a new business unit, Chase Business Services, to combine certain internal functions such as human resources, audit, and administrative services.