First Interstate Announces Job Cuts, Huge Losses in Restructuring
LOS ANGELES (AP) _ First Interstate Bancorp said Thursday it will cut about 3,500 jobs in a streamlining that, along with loan problems, will cause a $200 million third- quarter loss and a loss for the year.
The cuts, which amount to slightly more than 10 percent of the company’s workforce, will be made at farflung operations across the Western United States. It’s hoped the company will save $250 million per year in operating costs when the restructuring is complete, Chairman Ed Carson said.
The cost-cutting was announced in the middle of a consolidation wave in the battered U.S. banking industry. It came exactly one month after news of a merger between First Interstate’s biggest competitors, BankAmerica Corp. and Security Pacific Corp.
The merger is expected to save those banks $1 billion a year in costs, but well over 10,000 employees will lose jobs.
First Interstate said it would take a $90 million charge to cover the costs of the broad restructuring. As expected it also cut its quarterly stock dividend by 60 percent, from 75 cents per share to 30 cents.
The makeover includes setting up one regional management system for operations at the Arizona, Nevada, Utah, Colorado, Wyoming and New Mexico banks, and another for Oregon, Washington, Idaho, Montana and Alaska.
The announcement by First Interstate was the latest and biggest in a series of restructuring steps it began in 1989 after an expansion crusade undertaken by former Chairman J.J. Pinola foundered on collapsing real estate markets in the Southwest and other problems.
After the spate of recent bank mergers are completed, First Interstate will be the ninth largest U.S. banking company, with $51.4 billion in assets.