Joining a host of other major banking companies that are trying to slim down, PNC Bank Corp. of Pittsburgh has begun a campaign to shave annual expenses by as much as 5%, or $200 million.

The $77.2 billion-asset company is relying on managers in each of its nine business lines to scour their operations and come up with cost-cutting plans, said spokesman Jonathan Williams.

"They have all been asked to look at their competitors to see what it would take to be best in class," he added.

That "best practices" approach means, for example, that the mutual fund unit will look to other asset managers for ways to improve, while the mortgage area will look at independent mortgage companies.

Like other bank holding companies in the midst of restructurings-among them Citigroup, First Union Corp., and Republic New York Corp.-PNC will seek to redirect savings into higher-growth areas, in its case mutual fund management, securities processing, and private banking.

This week the $50 billion-asset Republic New York announced an annual cost reduction goal of $67 million, saying it would get two-thirds of the way there this year. Its plan included a 10-year outsourcing contract with Computer Sciences Corp.

PNC would not say whether it had hired an outside consultant to help identify efficiencies. Analysts said they believe the company is going it alone while underscoring the autonomy of its business-line leaders.

"We don't view PNC as a homogenized banking company, and the reviews will be conducted accordingly," Mr. Williams said.

"Banks are in a continuing drive to transform themselves into higher- performance operations," said Eric Rothmann, a banking analyst with Stephens Inc. of Little Rock, Ark.

PNC's effort reflects a desire "to improve what is already a solid franchise," he added.

Mr. Williams declined to comment about possible layoff numbers or charges to earnings. He did say that "redundancies" are being looked for. The banking company employs 25,000, including 8,000 in greater Pittsburgh.

PNC might be able to consolidate certain operations in the Pittsburgh area to achieve or improve economies of scale, analysts said.

The cost-cutting review will extend to routine day-to-day expenses. "There are a number of aspects that could be made more efficient," Mr. Williams said, including travel expenses and the amount spent on overnight mail.

The spokesman said managers were asked to begin evaluating their expenses early this year. Results of the reviews are just beginning to come in. The goal is to have the cost saves in place by yearend, analysts said.

PNC's initiative is partly driven by a desire to boost return on equity, which was 20.8% for 1998. Higher-performing banking companies are typically aiming for ROE in the 25% range, Mr. Rothmann said.

PNC's efficiency ratio, the measure of overhead that relates expenses to revenues, is also an issue. The bank was at a relatively high 62% last year and wants to get down to 50% or better.

PNC is experiencing slow growth in core retail and large-corporate banking, activities that may bear the brunt of any cutbacks, according to Joseph Duwan, a banking analyst with Keefe, Bruyette & Woods Inc.

Another focus of the program may be the unit that specializes in small and midsize businesses, Mr. Duwan said. PNC would like to boost its earnings growth from single to double digits, and the cost reductions should increase profits "to the benefit of the corporation as a whole," he added.

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