Mercantile Bankshares Corp.'s wealthy-client unit has undertaken a reorganization plan that cuts about 30 jobs and uses the savings to invest in new technology and make new hires that it can better position within the unit, a top bank executive said yesterday.

"This is not about cost reductions," said Wallace Mathai-Davis, chairman of Mercantile's investment and wealth-management business. "It's about leveraging and redirecting our resources. It's about repositioning and placing our resources in a different area."

In the longer term, bank officials said, the reorganization will significantly improve service to clients of the wealth-management unit, not only by increasing the number of employees who more directly serve clients, but also by increasing the menu of investment products available to those customers.

President and Chief Executive Officer Edward J. Kelly III, who came to Mercantile just over a year ago, has identified the wealth-management business as the bank's best bet for faster profit growth. He brought in Mathai-Davis to recharge a unit that was viewed as something of an underachiever.

Mathai-Davis has brought in a new management team, many members of which are joining Mercantile from New York financial institutions.

For the wealthy, investment management has become a commodity business in which fees vary little from firm to firm. Investment advisers and bank trust departments are trying to carve out niches or differentiate themselves from rivals with better service or substantially broader product offerings.

Such makeovers aren't easy or cheap to engineer, analysts say.

The changes announced yesterday within Mercantile's investment and wealth-management subsidiary stemmed from recommendations developed during several months of study by a committee of about 15 top executives and managers of the bank's investment and trust unit, Mathai-Davis said.

To pay for those changes, Mercantile will cut costs in one area to pay for investments in another. Mercantile is eliminating 31 positions, including five that were scheduled for attrition, the bank said. That amounts to 13 percent of the investment and wealth-management unit's work force of 230. The dollar savings weren't quantified.

Many of those being let go have the wrong qualifications, don't fit in with the new strategy or can't be trained for the new jobs, the bank said.

Swift departures

The employees losing their jobs will in most cases have to leave Mercantile no later than tomorrow. Most of the severance packages granted range from eight weeks' to a year's pay, Mercantile said.

As it lets those workers go, Mercantile is hiring employees for its client teams, Mathai-Davis said. Under the reorganization, each client will have a client adviser assigned to fully understanding each customer's financial position.

A team of experts experienced in trusts, estate planning, tax laws, custodial accounts, cash management and lending will also support the client adviser.

Other savings in salaries and benefits will help pay for the installation this summer of technology for better analyzing and managing client portfolios, Mathai-Davis said.

Clients will be informed of the changes this week, Mercantile said.

Effect on earnings

Davenport & Co. analyst David West said he hadn't heard about the reorganization.

"Trying to shake up an old trust business" is a long-term project, he said, and a strategy likely to increase Mercantile's earnings growth.

"It's a bank that lends itself to this kind of thing," said West, who is director of research for Richmond, Va.-based Davenport.