Comerica Inc. said Wednesday that it has hired Tandon Capital Associates, a New York-based consulting firm known for significantly shaving expenses through massive job reductions.
Comerica chairman and chief executive Eugene Miller said he didn't know how many of the bank's 13,000 positions will be eliminated, but he added his company doesn't want to be left behind as the industry continues its drive for profitability through staff reductions.
The Detroit-based bank imposed a hiring freeze Wednesday and said all major initiatives and promotions would be deferred.
"We will have fewer positions," Mr. Miller said, "but we will not know that number until January."
Comerica, with $35 billion of assets, launched its restructuring effort in March 1995 to avoid a takeover. The bank has made a number of related strategic decisions in recent months, such as selling its unprofitable $1.4 billion-asset Illinois bank to ABN Amro North America.
"We have a game plan," Mr. Miller said. "If we stick to that game plan, we could create shareholder value."
Tandon Associates, led by former McKinsey & Co. executive Chandrika Tandon, recently advised Milwaukee-based Firstar Corp. to slash 26% of its work force in a $110 million expense-reduction program. But analysts, who said they were surprised by the choice of consultants, added that Comerica likely won't have to lay off as many people.
"The cuts may not be as severe," said Joseph Duwan, an analyst with Keefe, Bruyette & Woods. "Comerica has less fat."
Indeed, Comerica eliminated 1,800 positions when it merged with Manufacturers National Corp. in June 1992. In the current streamlining, Comerica plans to eliminate as many as 300 jobs by next year.
Tandon will work with Comerica through yearend to identify additional areas for cuts. The company said it will announce its findings in January and act on the recommendations through 1997.
Mr. Miller said he wants to be among the top banks in the country for profitability, improve the bank's ratio of expenses to revenues from 56% to 50%, and become even better at corporate lending.
Mr. Miller said he believes Comerica, which recently reported a second- quarter earnings gain of 16%, was not in a financially weak position, which would should make expense reductions easier.
However, Mr. Miller said he is open to any suggestions from the consultant. "We've set no targets other than we have to take a hard look at the organization," Mr. Miller said.
Mr. Duwan said the choice of Tandon was unexpected because Comerica's earnings have been strong in recent quarters.
He added that Comerica runs the risk of negatively affecting revenue growth if the stress created by looming layoffs takes its toll on employee morale. But analysts generally approved of the decision.
Tandon has worked with a number of companies previously, including Chase Manhattan Corp., Fleet Financial Group, and Midlantic Corp.