PNC cuts to RBC's staff could be less severe

PNC Financial Services' recent disclosure of a worst-case scenario for layoffs after it takes over RBC Bank, accompanied by public statements downplaying the number of job cuts, follows a pattern the company has shown after other major deals.

But pinning down how those past scenarios played out is difficult. The reason: PNC, like many large corporations, is far from transparent when it comes to layoffs.

The bank has a policy of not disclosing local job numbers.

"We just consider it proprietary information," said Fred Solomon, a PNC spokesman. "It's competitive information."

Solomon said last week the actual number of RBC layoffs would be much smaller than the 621 PNC reported in a recent filing with the state Department of Commerce. Some employees whose jobs are eliminated could land other positions at the bank and others may leave on their own before PNC takes over, Solomon said.

Pittsburgh-based PNC took a similar approach in 2007 after it acquired Maryland-based Mercantile Bankshares - a much smaller bank than RBC with 240 branches.

The company unveiled plans to eliminate about 900 Mercantile Bankshares jobs. But PNC officials declined to say how many employees ultimately would lose their jobs, saying, again, that some might leave on their own and others might get new positions at the bank.

In February 2009, after PNC roughly doubled in size with its $5.2 billion acquisition of Cleveland-based National City Bank, it announced plans to cut 5,800 jobs over two years. Those cuts, part of a plan to reduce expenses by 10 percent - or more than $1.2 billion a year - included eliminating jobs on the PNC side of the operation as well as positions obtained from National City.

That announcement came with some asterisks. National City, saddled with losses arising from subprime mortgages, previously had announced plans to eliminate 4,000 jobs. An additional 500 jobs were tied to branches in Western Pennsylvania that regulators ordered PNC to divest.

In an interview with The Plain Dealer newspaper in Cleveland at the time, CEO Jim Rohr wouldn't say where the 1,300 other jobs cuts would fall but said some would come from attrition and open positions. In addition, some employees whose positions were cut could be offered different jobs at the bank.

Based on jobs data PNC filed with the Securities and Exchange Commission over the next two years, the net job cuts were less than the announcement. By the end of 2010, PNC's total employment had declined by 5,051 after excluding those who worked at a PNC business that was sold.

An unclear picture

Even that doesn't provide a clear picture of how many workers were laid off, however, because some of those laid-off workers may have been offset by the hiring of a new employee.

Solomon said each position eliminated doesn't necessarily mean a worker lost a job.

"In some cases, the worker found work at another company or retired, and PNC eliminated the empty position," he said.

Tony Plath, a finance professor at UNC Charlotte, speculated that the 621 job cuts PNC reported to the state are overstated.

"The cuts aren't going to be that deep," he said. "I don't think they'll consolidate their operations that quickly and that completely."

In a typical bank consolidation, he said, you'd expect job cuts in the neighborhood of 15 percent.

The 621 potential cuts in Raleigh and Rocky Mount account for about 40 percent of the RBC employees in the two cities.

RBC has about 500 employees in Raleigh and 1,000 at its operations center in Rocky Mount, the site of the bank's headquarters until it moved to downtown Raleigh in 2008. The operations center handles functions such as information technology and mortgage processing.

On Friday, PNC's website listed 17 open positions within 50 miles of Raleigh, an area that includes Rocky Mount, and 66 positions statewide. Some open positions represent multiple jobs.

"Everybody assumes that a company that is laying off or is reducing its staff in one area is simply reducing its staff," Solomon said, "when the reality is that companies like PNC are constantly adjusting that staff to meet business needs."

It's also conceivable that some workers whose jobs are eliminated by PNC could be picked up by RBC's parent company, Royal Bank of Canada, which will maintain a significant local presence. Royal Bank has leased 43,278 square feet of space in northwest Raleigh for managers and back-office support focused on providing banking services to its Canadian customers when they're in the U.S.

Solomon referred questions about possible overlaps to RBC, which isn't discussing details until the operation receives regulatory approval.

PNC is expected to complete the $3.45 billion acquisition of RBC in March. Based on PNC's track record, the net effect of the cuts it plans for Raleigh and Rocky Mount are unlikely to be made public.