Bank chief reportedly orders cuts

August 20, 1991|By Los Angeles Daily News

LOS ANGELES V — LOS ANGELES -- Security Pacific Corp. Chairman Robert H. Smith has ordered massive cost-cutting measures in expectation of the Los Angeles-based bank's acquisition by BankAmerica Corp., according to a memo obtained by the Los Angeles Daily News.

The cuts, which include a partial hiring freeze and a ban on further capital expenditures, represent the beginning of Security Pacific's dismantling and come months before shareholders and regulators are expected to give their approval to the $4.4 billion merger.

The moves also are part of what analysts expect will be ruthless cost cutting at both banks in an attempt to save $1 billion annually within three years. Lower operating costs was a major reason cited for the merger, in which BankAmerica will be the surviving entity.

Much of those savings will come from eliminating jobs and closing hundreds of duplicate branch offices. Both banks have refused to give specific numbers, but at least 10,000 positions are likely to be eliminated.

"During the next several months, anticipating the successful consummation of the merger, we must . . . avoid all unnecessary expenditures," said Smith in a memo to staff members dated Aug. 14, two days after the merger was announced.

BankAmerica Corp. Chairman Richard M. Rosenberg announced last week a hiring freeze at the San Francisco-based company. But analysts expect Security Pacific to take the brunt of the cuts once the merger of California's first and second largest banks is completed early next year.

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