The first big wave of job cuts is expected to be announced today at First Union Corp., and more are coming later this month.
First Union said in February that it planned to trim 5% to 10% of its work force in the face of declining revenue growth. Up to 7,200 employees could be affected.
Each of the banking company's business lines has been under review since January, said spokesman Jeep Bryant. Business heads have been instructed to eliminate an undisclosed percentage of expenses. Some of the business heads are expected to notify staff of cuts today.
A "number" of other businesses may not wrap up their reviews until next week or later, Mr. Bryant said. "We did not target a single day for the notifications, but we did say we wanted to get it done quickly," he added.
Mr. Bryant would not discuss the ultimate size of the layoffs or which units were expected to issue pink slips today.
Analysts said they expect the job cuts to rise to the high end of the Charlotte, N.C., holding company's estimate.
The $230.7 billion-asset First Union said it wants to trim $400 million from 1999 expenses through staff reductions, branch closings, and the possible elimination of businesses deemed unprofitable.
"In these situations, you always pick the lowest-hanging fruit first," said Bradley Ball, an analyst at Credit Suisse First Boston, who said those most likely to be let go include outside consultants, support and administrative staff, and redundant back office and technical personnel.
In a memorandum to employees dated Feb. 19, First Union explained that expense cuts would be made across the board, especially in areas where overlap was created by recent acquisitions.
Highly profitable units, including capital markets and capital management, would be little affected, the bank said. First Union said it would continue to invest aggressively in those groups, in a national advertising campaign, and in Future Bank, a project to convert traditional branches to electronically oriented sales centers.
First Union told analysts it fell $50 million shy of its projected $258 million in first-year cost savings from the 1998 acquisition of Philadelphia-based CoreStates Financial Corp. The bank said it still expects to achieve $100 million in revenue enhancements and would cut the $50 million in expenses over a longer, 18-month time frame.
"It shows that the integration with CoreStates did not prove to be as fruitful as they thought it would," said Katrina Blecher, an analyst at Brown Brothers Harriman & Co.
Mr. Ball added that First Union "didn't get the immediate revenue synergies they anticipated with the Money Store," a Sacramento, Calif., finance company it acquired last year.
First Union has also substantially lowered its revenue goals this year. The bank now projects $94 million in new business, down from the $194 million it had predicted.