M&T Bank Corp., which agreed to buy scandal-tainted Allfirst Financial Inc. last fall, will slash 1,132 jobs, or 20 percent of Allfirst's work force.
About half of the cuts - 657 workers - will be made in Baltimore and will include employees in support staff, human resources, marketing, information technology and finance, company executives said.
The company began notifying employees in meetings yesterday afternoon.
The first round of layoffs will occur in two months, with the rest phased in over the year.
The across-the-board cuts will also affect Cumberland; Millsboro, Del.; Harrisburg, Pa.; York, Pa.; and other areas in the region where Allfirst has operations, the company said.
"I would class these cuts as entirely rational and justifiable," said Eugene J. Sheehy, chairman of Allfirst Financial, which is owned by Allied Irish Banks PLC in Dublin, Ireland.
C. Michael Zabel, a spokesman for Buffalo, N.Y.-based M&T, said: "This is a surgical procedure for us. It is something that a lot of thought and energy went in to. It is carefully crafted to achieve long-term results."
Zabel said there will be no additional layoffs and the decision to reduce employees will help "build a company that is going to grow and contribute to this community."
In March, 346 employees will be dismissed, company executives said, followed by 144 by midyear and 642 during the balance of the year.
M&T has set aside $40 million for severance payments. Employees with the longest service could receive up to 52 weeks' salary. All employees will receive health and life insurance benefits and outplacement assistance.
The company plans to add 557 new jobs over the next 18 months in areas that include mortgage and retail lending and investments, executives said. About half of those jobs will be in Allfirst's market, which includes Maryland, Pennsylvania, Delaware, Northern Virginia and Washington, D.C. The other jobs will be in Buffalo and M&T's traditional market.
Priority to apply
Employees who are dismissed will be given first opportunity to apply for the new positions, executives said.
"We have taken every opportunity to get as many people to go up to Buffalo," Sheehy said.
M&T's announcement did not come as a surprise. Shortly after agreeing to acquire Allfirst in September for $3.1 billion, executives said job cuts were needed to trim $100 million in costs. M&T executives also met with employees on a number of occasions to warn them of looming layoffs.
"We are not surprised at the magnitude of the cuts," said Bert Ely, a bank consultant in Alexandria. "Allfirst was an under-performing bank; everybody knew that."
Ely said the result of the cuts is "a net job shift from Baltimore to Buffalo."
Mark Fitzgibbon, co-director of research at Sandler O'Neill & Partners, a New York-based investment banking firm, said M&T is not viewed as a company that "cuts to the bone."
"They have done well keeping the muscle and removing the fat," he said. "I think M&T is one of the more thoughtful acquirers in how they approach it."
M&T's announcement came nearly a year after Allfirst revealed that it lost $691.2 million.
Allfirst currency trader John M. Rusnak, 38, hid the losses through fake trades entered into the bank's computer system. The trades made Allfirst's profits appear to rise and allowed Rusnak to make even larger bets on currencies.
The fraud led to a sweeping overhaul of Allfirst's executive suite. Rusnak was fired from Allfirst along with six co-workers and supervisors who failed to detect the phony trades.
Last spring, Allied Irish sent Sheehy to Baltimore to take over for Chairman Frank P. Bramble, who took early retirement after the scandal broke. Susan C. Keating, Allfirst's president and chief executive, resigned in July.
The combination of the fraud and Allfirst's poor performance convinced Allied Irish officials to sell the company. The deal, however, was in the works before the scandal was uncovered, officials said.
The transaction, which is expected to be completed this spring, would make M&T the country's 18th-largest banking company, with $50 billion in assets and more than 700 branches in six Northeastern states and Washington.
Under the agreement, Allied Irish will have a 22.5 percent stake in M&T, and Sheehy will be chairman of the Mid-Atlantic division and join M&T's executive management committee and board.
"I have no plans to go," Sheehy said yesterday. "I am taking on this job. I want to be involved in the day-to-day franchise here. I don't regard myself as somebody on watch."
Savings unknown
Yesterday, Sheehy and Atwood Collins, the top two executives in Baltimore for Allfirst and M&T, informed Baltimore Mayor Martin O'Malley and Delaware Gov. Ruth Ann Minner of the cuts. Allfirst operates a large call and processing center in Delaware.
The executives said they didn't know how much the job cuts announced yesterday will save. They also don't believe the cuts will drive away customers.
M&T will invest in the community in Baltimore and the region, said Collins, M&T's president and chief operating officer for the Mid-Atlantic region.
Allfirst donates about $2.5 million annually, Collins said, and that figure will not be reduced.
"They [Allfirst] have a terrific legacy. We hope to continue that," Collins said. "We are very excited about this opportunity."
About half of the cuts - 657 workers - will be made in Baltimore and will include employees in support staff, human resources, marketing, information technology and finance, company executives said.
The company began notifying employees in meetings yesterday afternoon.
The first round of layoffs will occur in two months, with the rest phased in over the year.
The across-the-board cuts will also affect Cumberland; Millsboro, Del.; Harrisburg, Pa.; York, Pa.; and other areas in the region where Allfirst has operations, the company said.
"I would class these cuts as entirely rational and justifiable," said Eugene J. Sheehy, chairman of Allfirst Financial, which is owned by Allied Irish Banks PLC in Dublin, Ireland.
C. Michael Zabel, a spokesman for Buffalo, N.Y.-based M&T, said: "This is a surgical procedure for us. It is something that a lot of thought and energy went in to. It is carefully crafted to achieve long-term results."
Zabel said there will be no additional layoffs and the decision to reduce employees will help "build a company that is going to grow and contribute to this community."
In March, 346 employees will be dismissed, company executives said, followed by 144 by midyear and 642 during the balance of the year.
M&T has set aside $40 million for severance payments. Employees with the longest service could receive up to 52 weeks' salary. All employees will receive health and life insurance benefits and outplacement assistance.
The company plans to add 557 new jobs over the next 18 months in areas that include mortgage and retail lending and investments, executives said. About half of those jobs will be in Allfirst's market, which includes Maryland, Pennsylvania, Delaware, Northern Virginia and Washington, D.C. The other jobs will be in Buffalo and M&T's traditional market.
"We have taken every opportunity to get as many people to go up to Buffalo," Sheehy said.
M&T's announcement did not come as a surprise. Shortly after agreeing to acquire Allfirst in September for $3.1 billion, executives said job cuts were needed to trim $100 million in costs. M&T executives also met with employees on a number of occasions to warn them of looming layoffs.
"We are not surprised at the magnitude of the cuts," said Bert Ely, a bank consultant in Alexandria. "Allfirst was an under-performing bank; everybody knew that."
Ely said the result of the cuts is "a net job shift from Baltimore to Buffalo."
Mark Fitzgibbon, co-director of research at Sandler O'Neill & Partners, a New York-based investment banking firm, said M&T is not viewed as a company that "cuts to the bone."
"They have done well keeping the muscle and removing the fat," he said. "I think M&T is one of the more thoughtful acquirers in how they approach it."
M&T's announcement came nearly a year after Allfirst revealed that it lost $691.2 million.
Allfirst currency trader John M. Rusnak, 38, hid the losses through fake trades entered into the bank's computer system. The trades made Allfirst's profits appear to rise and allowed Rusnak to make even larger bets on currencies.
The fraud led to a sweeping overhaul of Allfirst's executive suite. Rusnak was fired from Allfirst along with six co-workers and supervisors who failed to detect the phony trades.
Last spring, Allied Irish sent Sheehy to Baltimore to take over for Chairman Frank P. Bramble, who took early retirement after the scandal broke. Susan C. Keating, Allfirst's president and chief executive, resigned in July.
The combination of the fraud and Allfirst's poor performance convinced Allied Irish officials to sell the company. The deal, however, was in the works before the scandal was uncovered, officials said.
The transaction, which is expected to be completed this spring, would make M&T the country's 18th-largest banking company, with $50 billion in assets and more than 700 branches in six Northeastern states and Washington.
Under the agreement, Allied Irish will have a 22.5 percent stake in M&T, and Sheehy will be chairman of the Mid-Atlantic division and join M&T's executive management committee and board.
"I have no plans to go," Sheehy said yesterday. "I am taking on this job. I want to be involved in the day-to-day franchise here. I don't regard myself as somebody on watch."
The executives said they didn't know how much the job cuts announced yesterday will save. They also don't believe the cuts will drive away customers.
M&T will invest in the community in Baltimore and the region, said Collins, M&T's president and chief operating officer for the Mid-Atlantic region.
Allfirst donates about $2.5 million annually, Collins said, and that figure will not be reduced.
"They [Allfirst] have a terrific legacy. We hope to continue that," Collins said. "We are very excited about this opportunity."