Union Bank of California is planning an efficiency push.

Under a program recently announced to employees, the San Francisco-based bank will attempt to get its efficiency ratio down to 55% or better from the current 62%.

"Union Bank of California has made great progress in growing market share, growing revenue, and improving shareholder return, but our efficiency ratio remains too high," said Robert Walker, the vice chairman in charge of the program that has been dubbed Mission Excel.

Starting Tuesday, the $32.3 billion-asset bank will pull as many as 40 managers away from their day-to-day duties. They will spend four months scrutinizing every unit of the bank, said spokeswoman Joanne C. Curran.

Recommendations could include eliminating some divisions, Ms. Curran said. Job losses are possible, but "laying off people is not the goal," she added. In fact, the bank has 600 to 700 open positions and will not impose a hiring freeze, she said.

"Our big goal is to fund high-performance growth areas by redeploying capital," she said. "There is no target number other than the efficiency ratio," which measures expenses as a percentage of revenue.

Union Bank, the main subsidiary of Japanese-owned Unionbancal Corp., will put the resulting recommendations into action from August through February 2001.

Analysts said a ratio above 60% is mediocre for an institution of Union Bank's size. To achieve 55%, the bank would have to cut $40 million in quarterly costs, increase revenue by $40 million per quarter, or achieve an equivalent balance, said James R. Bradshaw, an analyst with Pacific Crest Securities in Portland, Ore.

It is an ambitious goal, Mr. Bradshaw said, but one that ought to be within the bank's reach.

"Larger banks need to reinvent themselves every few years," he said. "They end up with too many people staffed in nonproductive areas, unprofitable branches-little inefficiencies that tend to build up."

Union Bank's quest for efficiency is especially important in light of a recent $750 million stock offering by its parent, Bank of Tokyo-Mitsubishi.

"The company is trying to become more shareholder-focused," said Joseph K. Morford, an analyst with First Security Van Kasper here. "A big reason investors participated in the offering was the prospect of increased earnings results through improved efficiencies."

Mr. Bradshaw said he sees Union Bank being able to meet its efficiency goal mostly by increasing revenue, rather than relying on cost-cutting.

The level of competition in California generally forces banks' costs up, Mr. Bradshaw said. But the market is vibrant enough to provide revenue sufficient to overcome the expense pressure.

"Banks ought to be able to turn the high cost of doing business there into additional revenue," he said.

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