Seeking to soften the blow of imminent layoffs, CoreStates Financial Corp. is offering employees a voluntary severance package.
The Philadelphia-based company plans to release details of a major consolidation plan in April that it concedes will mean pink slips for employees, but CoreStates is not disclosing how many.
Employees will find out if they are on the list the last week in March, said company spokesman Gary Brooten.
CoreStates instituted a hiring freeze last fall when it announced it was studying ways to cut costs.
The $27.4 billion-asset bank has yet to determine its exact staff- reduction or cost-reduction goals.
"Reductions in staff are being determined by the results of the process redesign, rather than the redesign being driven by staff-reduction goals," said Terrence Larsen, chairman, president, and chief executive officer.
Mr. Larsen added, "To the extent that voluntary separations meet the needs of process redesign, involuntary separations can be reduced."
In November, employees were told that if they get laid off, they would receive a week's pay for each year of service up to 10 years. For the 11th year and beyond, employees will get two weeks' pay.
If they choose to be a part of what CoreStates is calling a "volunteer separation program," they get the same package.
Analysts would not guess the staff or branch reductions that would result. But CoreStates is hardly the first bank in the region to consider sizable layoffs.
Jersey City-based National Westminster Bancorp laid off 400 in January, and First Fidelity Bancorp. said in the fourth quarter that it planned to eliminate 7.7% of its work force, including 1,000 positions as it closes 40 of its 710 branches.
CoreStates has had to integrate several acquisitions over the past two years, including Perkasie, Pa.-based Independence Bancorp for $514 million; Germantown Savings Bank for $260 million and Constellation Bancorp of New Brunswick, N.J., for $320 million.
"The acquisitions they've done put pressure on earnings and book value," said Morgan Stanley analyst Dennis Shea. "They are looking at this program to jump-start growth."
Some analysts complained that the bank is dragging out this effort and creating a morale problem.
"People are nervous inside," one analyst said. "In a situation like this you have to get the cuts done right away."
Analyst Merrill Ross of Wheat First, Butcher & Singer said CoreStates may be trying to encourage people to volunteer for the package to cut down on layoff-related charges in future quarters.
