PaineWebber Inc. has laid off as many as 16 municipal bond executives to make room for dozens of bankers, traders, and salesmen absorbed by the firm following its purchase of Kidder Peabody & Co.
Terry L. Atkinson, managing director of PaineWebber's municipal securities group, said yesterday that there has been a reduction in staff in the municipal department, but that the number was "modest."
"Net-net, the department is substantially larger as a result of the merger," Atkinson said. "We're certainly bigger than we were three weeks ago," he said.
But the magnitude of cutbacks within PaineWebber to make room for the Kidder additions is more dramatic than Atkinson suggested.
PaineWebber conducted an extensive performance review of its existing staff, and weeded out the bottom 10% of its municipal workforce, according to a high-ranking executive at the firm.
Atkinson would not confirm if PaineWebber's municipal staff was sacrificed to make room for the new hires from Kidder.
Sources at PaineWebber said the firm has laid off between 16 and 20 municipal executives, including eight investment bankers.
"Times are tough," the executive said.
One of those bankers said to be leaving is Albert Glowasky.
Glowasky, who was expected to be in PaineWebber's Oregon office yesterday, did not return a phone call there, but an assistant in New York said that "technically he is not" working for PaineWebber. Atkinson declined to discuss names and numbers.
News of the departures follows Atkinson's comments to The Bond Buyer last month that PaineWebber planned to dramatically increase the size of its municipal department despite the industry-wide downturn in municipal bond business. The number of new issues and refundings so far in 1994 has fallen 39.4% from last year's level.
Atkinson said at the time he has a long-term commitment to keeping most, if not all, of the Kidder newcomers. He said 50 to 55 Kidder employees have joined PaineWebber's municipal securities group since the proposed merger was first announced.
PaineWebber's municipal department is basically divided into two groups: origination, comprised of bankers and underwriters, and retail, comprised of brokers.
Although there have been no layoffs at the retail level so far, management has reduced personnel in the origination group because of the merger, a banking source said.
PaineWebber officially acquired Kidder Peabody's investment banking, equity research, and municipal finance businesses on Friday. It expects to close on Kidder's retail and asset management businesses in January.
PaineWebber announced yesterday that Theodore Sobel will join managing director Marvin Marcus as vice president in the company's newly created structured finance group. Sobel will be responsible for public power and utility issues.
Marcus, formerly Kidder Peabody's manager of government finance, will work on real-estate related and securitization transactions at PaineWebber.