Other than causing a minor ripple, Sovereign Bancorp’s announcement that it is laying off 500 employees seems to have had little effect on the industry or Wall Street.
The Philadelphia-based bank last week released word of layoffs in an announcement about “restructuring” at the company.
Although 300 of the layoffs will affect New England employees, John Hamill, chairman and chief executive officer of Sovereign Bank New England, said no branch personnel will lose jobs. The affected positions managers and back-office workers.
Last year, Sovereign purchased 281 FleetBoston branches and, in an effort to ensure a smooth transition, hired too many people, said Hamill.
“Partially [the layoff] is driven by the fact that when we were putting this together, we hired some 3,800 people within a few short months. Obviously you try to get this just right, but when the dust settled, we realized we overshot our numbers,” he said.
A team of about 50 people was appointed to analyze where there were redundancies or inefficiencies in the company. The decisions were not based on whether the employees were acquired or part of the original workforce, he said.
The restructuring also will include changes at the executive level. Hamill will take on the additional responsibility of building the Trust and Private Banking section of the New England division. Lawrence Thompson will serve as president of the Consumer Banking Group, Joseph Campanelli will be president of the Commercial Banking Group and Dennis Marlo will retain his roll as chief financial officer and chief credit policy officer.
The layoffs did not cause upset on Wall Street. “[Sovereign] stock is up a little bit; overall there doesn’t seem to be too much of a reaction,” said Kevin Timmons, senior banking analyst with the investment banking and brokerage firm First Albany Corp. of New York. “Anytime you have a transaction occur like Sovereign buying all those branches, you’ll probably find one of two things: You’re going to have more than enough people or you are lacking certain skill areas and you need to hire people,” he said.
“We are still a major employer in all of the New England states … and a major part of the community. What we are trying to do is what any good company would do. We are making sure there are no redundancies and no [extra costs] … that we are serving our customers well,” said Hamill.
Hamill said the employees affected by the layoffs were offered fair severance packages and help transitioning to new jobs. “This is always a difficult time to go through. Right now, [they’re] going through it at a time when we have virtually full employment. We think they’ll be able to find good jobs,” he said.
