While many on Wall Street were puzzled by Republic New York Corp.'s decision to hire a cost-cutting consultant, bank analyst Linda Stromberg said the move makes sense.

According to Ms. Stromberg, who works for M.R. Beal & Co., Republic pays its 5,500 employees too much. Salaries averaged $71,759 at Republic last year, the third-highest among 79 banks she surveyed.

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