Banks have gained attention lately for cutting costs by subleasing all or parts of branches that were built in the pre-online era, but the story doesn't stop there.
Belt-tightening is occurring in less visible areas than the lobby or teller windows. Count SunTrust Banks (STI) among the practitioners.
The $175 billion-asset company recently moved about 100 employees in northern Virginia, from six separate departments, into a single space in Tysons Corner. The move is squarely aimed at improving SunTrust's efficiency ratio, one of executive management's top priorities.
"We are going to be taking $100,000 a month out of [our real estate] space bill, out of the rental we are going to be paying," Aleem Gillani, SunTrust's chief financial officer, told analysts during a Jan. 17 conference call to discuss fourth-quarter earnings.
The office shifts will be finalized next month, Gillani said.
The employees worked in six departments, according to a company spokesman: commercial and business banking; private wealth management; mortgage; commercial real estate; treasury and payments solutions; and corporate and investment banking.
SunTrust wants to lower its efficiency ratio to below 64% by the end of this year, Gillani said last week. The Atlanta company has already cut the ratio from 71%, as of the end of 2012. [The lower an efficiency ratio the better for a bank, because that means it's spending less for each dollar of revenue.]
Analysts and investors have been keenly interested in how quickly SunTrust will cut costs and peppered both Gillani and Bill Rogers, CEO, with questions during last week's call.
"We will be able to take $50 million a quarter out of the run rate of the expense base," Gillani said in response to one question. "It is a challenging target. We are not making this easy on ourselves or our teammates."
The recent employee consolidation in the Virginia suburbs of Washington, D.C., was cited by Gillani as an example of how SunTrust is "making changes in our overall footprint and corporate real estate."
The 100 employees were moved out of the Falls Church, Va., area to the American Center West building in Tysons Corner. The new office is located a short walk from a new Washington Metro subway line, while the Falls Church building was beyond walking distance of public transit.
SunTrust thinks the move will make workers more productive, in addition to cutting costs. The employees will be moved "into sort of one common space where they are going to be able to actually work together to become more effective in the way in which we cover both the business and the personal needs of our corporate client base," Gillani said.