PNC Financial Services to eliminate 5,800 jobs

PNC Financial Services Group (NYSE: PNC), the new owner of National City Corp., said it plans to cut 5,800 jobs over the next two years as it reported a big fourth-quarter loss stemming from increased credit provisions and costs associated with the National City acquisition.



Just how many of the job cuts will be from the ranks of former employees of the Cleveland institution may never be known. PNC spokesman Fred Solomon said the bank intends to report on the job cuts “quarterly and business-wide” and will not specify how many job reductions involve former National City workers.

PNC did say about 500 job cuts would come from branch divestitures in western Pennsylvania. National City previously announced plans to cut 4,000 jobs when it was a stand-alone institution. The vast majority of those cuts likely would not have come from its Cleveland headquarters, but an overlap in job duties with administrative employees of PNC probably will change which jobs are lost.

PNC said it expected to save $1.2 billion annually with the cuts, which represent nearly 10% of PNC’s work force of 59,595 employees.

The Pittsburgh-based bank reported a fourth-quarter loss of $248 million, or 77 cents per share, compared with a profit of $178 million, or 52 cents per share, in the fourth quarter of 2007. Revenue rose 3% to $1.68 billion.

The latest fourth quarter included a $990 million credit loss provision, with $504 million related to the National City acquisition. PNC completed the purchase of National City Dec. 31.



PNC to re-enter mortgage business
Besides announcing the job actions, PNC said it also plans to re-enter the mortgage business, something it had only undertaken in a joint venture with Wells Fargo.

Mr. Solomon said he did not know how much of that business would be done by former National City mortgage employees. However, PNC chief executive James Rohr said in a conference call with securities analysts that the former CEO of PNC Mortgage had been re-hired to join the company and that PNC has a team in place that is reviewing long-term strategies for the business.

The former National City has been doing a lot of refinancing work, he said.

PNC chief financial officer Rick Johnson said he expected the National City acquisition to be accretive to earnings by the end of 2009. He attributed that belief in part to National City selling off $5 billion in loans since PNC did its due diligence on the bank last August. National City also took a $1.8 billion charge-off.

Regarding the integration of the two banks, Mr. Rohr said decisions about systems are nearly complete. Branch conversion will begin toward the end of the year, and some redundant branches in southwest Ohio and western Pennsylvania then will be eliminated.



Mr. Rohr said he did not expect National City’s footprint in slower-growth markets to quell PNC’s growth. Business in Chicago, Indiana, St. Louis, Kentucky and Cincinnati is going strong, he said.

“Those are very different markets than what you would think of as National City,” he said, referring to the bank’s Cleveland core. “They went outside their footprint and did a lot of consumer loans that make up a large part of their impaired portfolio.”

Going forward, Mr. Rohr said, all loans must have two signatures — including that of a risk management officer — to be approved.

By ARIELLE KASS AND SCOTT SUTTELL

8:42 am, February 3, 2009