PNC cutting hundreds of jobs

Notice given Mercantile workers as $6 billion merger proceeds

June 23, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

PNC Financial Services Group has notified several hundred employees of Mercantile Bankshares Corp., the Baltimore bank it acquired this year, that their jobs are being eliminated as the financial institutions merge back-office and administrative operations.

Affected employees were informed by a manager and human resources representative during individual meetings that began last week. They discussed severance and other opportunities at Pittsburgh-based PNC, which has 200 job openings in Maryland, and the employees were given at least two more months before they have to leave.

"We've got the capacity to perform these functions elsewhere," PNC spokesman Fred Solomon said yesterday.

PNC officials have acknowledged since announcing the acquisition in October that jobs would be lost at Mercantile. The $6 billion deal marked the end of the largest Maryland-based bank and its 143-year history in Baltimore.

Still, PNC officials have not released the specific number of positions that will be cut because some employees may move to another position within PNC, retire or decide to leave on their own.

Most of the job cuts are among support staff, rather than among employees who deal with directly with customers, such as tellers and branch managers. Many of the eliminated positions are at Mercantile's operations center in Linthicum, which handled transaction processing.

PNC has said it anticipates saving $100 million a year through job cuts and other efficiencies, and that it plans to spend $40 million over the last three quarters of this year on integration expenses, such as severance and other costs. The bank aims to have Mercantile's changeover complete in September. That includes replacing Mercantile signage with PNC's logo and converting computer systems.

"Layoffs are to be expected in this situation," said Matthew C. Schultheis, an analyst with Ferris Baker Watts.

"It's pretty much as we expected, and everything seems to be right on target. A couple of hundred people is a good start in terms of cost savings, not for those people but for PNC," Schultheis said.

With the purchase of Mercantile, PNC took on an additional 240 branches in Maryland and surrounding states.

The move built on earlier inroads made in the area with PNC's acquisition in 2005 of the troubled Riggs National Bank in Washington.

PNC continued its acquisition streak when it revealed this month that it would buy Hamilton, N.J.-based Yardville National Bancorp for $403 million in stock and cash.

PNC announced Thursday it would build a new headquarters for the greater Washington region through a joint venture with the developer Vornado/Charles E. Smith, which would lease and manage a 350,000- square-foot building a few blocks from the White House.

Solomon said Mercantile's headquarters in Hopkins Plaza in downtown Baltimore will remain PNC's headquarters for the Baltimore area for some time.

Two Mercantile executives, Michael Reid and Peter Floeckher, have been named regional presidents for Baltimore and Maryland, respectively.

Other Mercantile executives have left, including the bank's chairman and chief executive, Edward J. "Ned" Kelly III. He announced June 11 that he was going to Washington-based Carlyle Group, one of the world's largest private equity firms.

Kelly will help run a new Carlyle unit that will invest in financial services, including banks and insurance companies.

laura.smitherman@baltsun.com

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