Mellon Bank Corp. has ordered its business heads to trim their 1992 budgets by 5.25% and keep 1993 budgets flat.
The move should result in savings of about $70 million, or 72 cents a share, in 1993, according to Livia Asher, an analyst at Merrill Lynch. Pittsburgh-based Mellon's operating expenses last year were $1.26 billion and are running at a rate of $1.34 billion this year.
Mellon spokesman Thomas Butch confirmed the cost-cutting mandate and said the $70 million estimate is reasonable.
Staffs Cuts to Be Determined
Layoffs are a possibility, but no specific targets for staff reduction have been set since management of individual business areas will determine how to achieve the budget cuts, Mr. Butch said.
As to whether Mellon is preparing to take a charge for severance costs in connection with the budget-trimming, Mr. Butch said: "It's possible a charge could be booked later this year but none yet has been calculated."
Mr. Butch said the budget cuts are "really part of the normal course of business," and that "this effort is an extension of and consistent with what we've been doing with expense control for the past five years."
Merrill Lynch's Ms. Asher said that Mellon's overhead ratio of 70% "is on the high side" compared with an average of 68% at other regional banks.