in Providence.
Bank
of America vows to retain workers, but it has cut 10,000 jobs since 2001
Building a Strong Data Foundation in the Age of AI
Artificial intelligence (AI) has become a key priority in the boardroom and across management —…
Learn More
As the banking industry and investors continue to digest Bank of
America’s planned $47 billion buyout of FleetBoston, local Fleet employees are
left to wait several months or even years for the next shoe to drop.
Executives from both companies insisted last week that Bank of America is
committed to keeping the New England work force at its present level. But many
analysts have said that number will include a significant percentage of transfers
from out of state, and cuts at Fleet will be deep.
Charlotte-based Bank of America’s all-stock takeover of Fleet, announced Oct.
27, would make it the second-largest bank in the United States based on assets.
The deal must clear a bevy of shareholder and regulatory hurdles and likely
won’t close until second quarter of 2004, officials said.
“There is an understanding that employment will stay flat in New England,”
said Chad Gifford, Fleet’s chief executive officer, who would serve as chairman
of Bank of America after the companies are merged. Gifford added that Bank of
America hires an average of 35,000 employees every year, a harbinger of future
job growth in the region.
“That’s not to say people won’t lose their jobs; people will,” Gifford told
reporters at a press conference in Boston the day of the announcement. “That’s
always the most difficult part of something like this.”
Bank of America CEO Kenneth Lewis said a number of key divisions, including
wealth management, asset-based lending, leasing and small business will be based
in Boston. He said the combined revenue from Bank of America’s future Boston-based
divisions are greater than Fleet’s overall revenue today.
“There are going to be some inflows of people right off the bat,” Lewis said
at the press conference.
But that likely will mean outflows from Fleet’s present work force, analysts
say.
“Bank of America could take some division from Chicago or St. Louis or Charlotte
and move it to Boston,” said Richard Bove, an analyst who covers Bank of America
for Hoefer & Arnett, an investment-banking firm in San Francisco. “But there’s
no way it can maintain FleetBoston’s employment at current levels.”
Bove, who described Bank of America’s past job-cutting strategy as “slash-and-burn,”
estimates that 20 percent of Fleet employees will lose their jobs if the deal
goes through. Lewis has eliminated more than 10,000 jobs since taking over Bank
of America in 2001.
Gifford said it’s too early to tell where the cuts would be, but many analysts
have said the company likely will seek to wring the promised $1.6 billion in
cost savings from overlapping back-of-house operations such as accounting, leasing,
information technology and human resources.
“You have to assume there will be some back-office consolidation,” said Wayne
Bopp, an analyst at Fifth Third Investment Advisors in Cincinnati, which owns
shares of both companies.
Fleet has a 1,000-employee call center in Lincoln and a 500-employee technology
center in Johnston.
Bove said Bank of America has one of the most sophisticated customer call
centers in the banking industry, and he is doubtful the company would keep Fleet’s
call centers. He added that Bank of America generally uses one technology platform,
and it is unlikely that it would integrate the system with Fleet’s IT operations.
Neil Steinberg, chief executive officer of Fleet Rhode Island, emphasized
that Bank of America agreed to the acquisition because it liked what it saw
in Fleet’s customer base, operations and culture.
“We are the premium,” Steinberg said in an interview the day following the
announcement. “We’re what they’re paying for.”
Indeed, most pundits predict there will be few changes at the branch level,
because the physical presence of Fleet’s 1,458 branches and 6,000 ATMs in the
Northeast was key to the acquisition.
“Since there is no branch overlap, I would think you’d be OK if you’re working
in Fleet’s branch system,” Bopp said.
Steinberg said Bank of America is committed to keeping all Fleet’s existing
“customer-facing” employees in New England, such as bank tellers, branch managers
and loan officers. He added: “Local leadership will stay in place.”
Bove of Hoefer & Arnett agreed that Bank of America likely will follow
its past practice of keeping regional leadership teams intact. But he predicts
the cuts across middle-management layers would be widespread.
“Most of (Fleet’s) management teams will go,” he said.
Rhode Island business leaders, expressing optimism about Bank of America’s
future presence here, conceded last week that the prospect of job losses is
a big concern. A few emphasized the importance of showcasing Rhode Island as
a good place to base operations.
“Our biggest emphasis must be to make sure that the public policy is in place
to make this state attractive,” said Jim Hagan, president of the Greater Providence
Chamber of Commerce.
Michael McMahon, executive director of the Rhode Island Economic Development
Corporation, called Bank of America an “enlightened” company that has a long
history of working closely with local business leaders. McMahon said last week
that both he and Gov. Don Carcieri have sought a meeting with Lewis to “put
forth Rhode Island as a great place to do business and innovate at scale.
“We realize that consolidation and globalization are absolutely part of the
landscape, and we’re not going to turn back that wave,” McMahon said. “Instead
we need to make sure we have a trained work force and a user-friendly government
so we can get on top of that wave, instead of getting crushed by it.”
