Wells Fargo Indicates It’ll Cut Crocker Jobs Sharply, Swiftly
Wells Fargo & Co. will begin dismissing employees of Crocker National Corp. within a week of completing its previously announced $1.08-billion acquisition of its California banking rival around June 1.
The disclosure, by Wells Fargo President Paul Hazen at an impromptu press conference after the annual shareholders meeting here, indicates the speed at which Wells Fargo plans to absorb Crocker in the largest banking merger in U.S. history.
Though Hazen declined to say how many of Crocker’s 11,800 employees will be let go, he did say that severance and other merger-related expenses will come to between $50 million and $75 million over the next two years.
The range provided by Hazen confirmed analysts’ expectations that thousands of Crocker employees will be let go as Crocker is blended into Wells Fargo. A smaller number of Wells Fargo employees will also likely be terminated. Though both banks froze hiring when the deal was announced earlier this year, attrition clearly won’t be enough to reduce the combined payroll to Wells Fargo’s still undisclosed target level, analysts said.
Hazen said Crocker’s headquarters staff “is the most logical area” for major cutbacks, adding that further details will be announced as soon as the merger is consummated.
“As much as possible in that first week, we’ll be giving a clear idea of those who are staying and those who are leaving,” he said. A schedule identifying branches to be consolidated over the next six months to two years will also be laid out, he said.
“You don’t need a bank not knowing what direction it’s going in,” he said. Already, Wells Fargo’s managers have begun group meetings and one-on-one job interviews with Crocker employees at all levels to determine which ones will have a place in the combined organization.
He said it “could be as long as five to six months before (Crocker’s) retail customers see any changes” as a result of the acquisition.
William F. Zuendt, an executive vice president in Wells Fargo’s retail banking group, added that “we expect to send customers a letter saying ‘don’t panic.’ ” He said he is surprised by how many Crocker customers have expressed apprehension about cutting interest rates on outstanding certificates of deposits or canceling credit lines.
“A merger doesn’t let you break contracts,” Zuendt said.
Hazen said that despite competitors’ threats to capitalize on uncertainties surrounding the merger, there hasn’t been any material slippage in Crocker’s competitive position since the deal was announced. “Crocker’s deposits and loans haven’t changed since year-end,” he said.
Separately, Wells Fargo posted a 15% gain in first-quarter net income. Carl Reichardt, chairman and chief executive, told shareholders that, while the Crocker acquisition will result in “minimal dilution in earnings per share during the first year,” the deal “should make a positive contribution to Wells Fargo’s earnings per share beginning the second year after completion.”
