Bid for a California Banking Giant : WORKERS : Worries Surface in an Industry Already Hit Hard

After closely following the brutal succession of staff cuts at Southern California banks and savings and loans in recent years, employees at Wells Fargo & Co. and First Interstate Bancorp on Wednesday got a message many long dreaded: Their jobs could be next.

If Wells Fargo’s proposed takeover of First Interstate goes through, thousands of staffers could be thrown out of work--and that point has not been lost on anyone at the banks, from the executive suites to the teller windows. That is particularly true at Los Angeles-based First Interstate, which, as the acquired firm, would figure to absorb the brunt of the cutbacks.

“People are real worried,” said Gary Kaplan, an executive recruiter in Pasadena. He based his opinion on conversations with four First Interstate managers who called him for advice after the news of a possible takeover broke.

“The concern is that there’s been such a drastic shrinkage of opportunities for financial services executives in California, particularly in Southern California, that people don’t want to be caught in a position of weakness.”

Economic statistics justify those concerns. According to government figures, employment at banks, savings and loans and other “depository institutions” in California peaked at 274,200 in 1990 and then fell steadily. By 1994, the yearlong average was down 40,700, to 233,500. Last month’s figure was lower yet at 220,900.

“There are sizable numbers of people forced out over the last five or six years who probably never will work again in banking, at least in this market,” said Kaplan, who used to handle a lot of banking job placements but refocused on other fields after the market dried up.

Probably the most dramatic job losses in the industry locally came at Security Pacific Corp. after it was acquired by BankAmerica Corp. in 1992. BofA said 5,000 jobs were eliminated, although several estimates put the figure higher.

Further job losses have come at banks and savings and loans that either closed or slimmed down after the real estate market collapsed, along with the rest of the economy, in the early 1990s.

Still, not everyone working in the banking industry was sweating over Wednesday’s news.

Raana Hasnat, a business development officer at First Interstate’s Downtown offices on Wilshire Boulevard, said it is too early to worry. “Nothing has happened yet, so why panic about it or get excited about it?” she said.

But Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County, was less sanguine. “The rationale behind all of these mergers is that you cut costs and get the maximum efficiency you can,” he said.

As for the effect on the overall Los Angeles job market, which has struggled to recover from a recession that began in mid-1990, Kyser said the proposed takeover will hurt.

“Does this stop our economic recovery? No. But it would certainly slow things down,” he said.

Meanwhile, at Wells Fargo and particularly First Interstate, consultants said productivity is likely to wane while employees nervously await word about their jobs.

During takeovers, Kaplan said, “people become preoccupied with survival and they become preoccupied with their own self-interest. You can imagine what it’s like in the halls of these companies.”