CIT Group will pay about $60 million in severance to 14 executives who have been dismissed or left the company, as it continues to shuffle its executive lineup following its August acquisition of OneWest Bank.
The $65 billion-asset company on Tuesday terminated Joseph Otting, former CEO of OneWest Bank; Nelson Chai, president of CIT Group; Lisa Polsky, chief risk officer at CIT Group; and 11 other executives, according to a regulatory filing.
The $60 million in severance is "basically what it cost to get rid of people, particularly expensive, senior people," John Thain, CIT's chief executive, said at the Goldman Sachs Financial Services conference in New York Wednesday.
CIT did not identify the other 11 executives that it fired on Tuesday.
After CIT acquired OneWest, it had named Otting co-president of CIT Group and president and CEO of CIT Bank. However, in October, CIT announced that Ellen Alemany, the former head of RBS Citizens, would replace Thain when he steps down as CEO next year
On Tuesday, CIT appointed Alemany president and CEO of CIT Bank; she will retain those titles when she becomes CEO next year of CIT Group, the holding company. Alemany's appointments effectively spelled the end of Otting's tenure at CIT.
"We don't need to have a CEO of the holding company and a CEO of the bank," Thain said at the conference. So, yes, it's a one-time cost, but it allows us to reduce our costs going forward."
The "flattening" of the organization structure is consistent with the company's strategy of being "regional bank-centric," Thain said.
CIT, in New York, will record a restructuring charge of $60 million in the fourth quarter to cover the terminations and for other organizational changes.
Also on Tuesday, CIT named Robert Rowe to succeed Polsky as chief risk officer. Rowe was previously chief credit officer at CIT.
CIT also hired Steve Solk as president of CIT Business Capital. Solk was previously president of commercial finance at RBS Citizens, where Alemany was formerly CEO.
CIT also named Kenneth Brause treasurer, promoting him from the position of chief financial officer for CIT's North American banking segment.
Chris Cumming contributed to this report.