McKinsey to Help National City Cut Costs
In an effort to pare down its costs, Clevelandbased National City Corp. said Monday it hired the consulting firm McKinsey & Co. to undertake a companywide review of its operations and business procedures.
"We intend to accomplish a downward trend in our noninterest expense ratios over the next several years," Edward B. Brandon, National City's chairman and chief executive officer, said in a prepared statement.
National City, which is attempting to acquire crosstown rival Ameritrust, spent 64.85 cents per dollar of revenue on expenses in the first quarter, according to Keefe, Bruyette and Woods.
While that's much better than many larger banks, Banc One Corp., which disclosed that it would also look at Ameritrust, has a ratio of 52.81% as of the first quarter.
Thomas Richlovsky, treasurer at National City, said the decision to hire McKinsey was independent of the bidding for Ameritrust.
But he stressed that "we're convinced that if we're not a low-cost producer, we're not going to be in a position to thrive in the coming environment" of bank consolidation.
John Snow, banking analyst at Chicago Corp., said, "If they're going to be competitive with Banc One, they need to show as much as possible about cost cutting."