Hanover Plans To Restructure European Units
Manufacturers Hanover Corp. announced on Tuesday that it is restructuring its European operations and laying off 5% of its London-based staff of about 1,000.
Hanover said it is adopting the two-tier structure for corporate customers in Europe that it implemented six months ago in the United States as part of a reorganization of its wholesale banking operations.
Under the new structure, clients are grouped by creditworthiness: those heavily dependent on bank loans because of their low credit ratings, and highly rated companies that buy capital markets products and operating services from the bank.
Herbert F. Aspbury, a group executive responsible for Europe, will move to London from New York to more directly manage customer relations. At the same time, the company is laying off 50 London bankers, all of whom deal with customers.
Arntzen to Head Business Unit
Morten Arntzen, who has been in charge of European multinational customers, will run the credit-intensive business unit. Richard Smith, who headed the loan syndications and capital markets businesses in London, will run the highly rated customer group.
Hanover president Thomas S. Johnson said earlier this month that the corporate banking unit plans to reduce costs by 3% this year, adding: "I fully expect that we can do better than that plan."
Hanover, which has more than $10 billion of European assets, closed two offices in Stockholm and Zurich this year. Though the layoffs were part of a plan announced last year to cut more than 1,400 people, officials said more cuts are expected.
Hanover's wholesale bank group earned $248 million last year, only a small part of which is believed to have been generated in Europe.
Excluding treasury activities, first-quarter profits were $54 million, representing a return on equity of 14%.