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Synergized Out Of A Job

Mish discusses synergies and downsizing in merging and non-merging financial entities, more job losses in non-financial companies due to downsizing, and more layoffs to after Christmas.

19,000 WaMu Employees Will Be Synergized Out Of A Job

Courtesy of Mish

Forbes is reporting JPMorgan Plans To Ax The WaMu Suits.

Up to 19,000 employees of Washington Mutual face being laid off this weekend as JPMorgan Chase turns up the synergy on its recent acquisition.

On Friday, JPMorgan Chase (JPM) said it expects to retain the 22,000 employees who work at Washington Mutual branches and 2,000 workers in the mortgage and wealth management divisions in California, spokesman Tom Kelly told Forbes.com. The company has not yet determined the total numbers to be cut in other states, but it planning to inform all former WaMu employees of their job status by Monday.

WaMu had about 43,000 employees as of June, according to a filing with the Securities and Exchange Commission. Combined, Chase and WaMu have about 5,400 branches. The company said it only plans to close about 10.0%.

The bulk of the job cuts will be at the Washington Mutual headquarters in Seattle due to the overlap in operations with the current employees at JPMorgan. 

Merger Synergizing

Expect to see more synergizing from all mergers we have seen. Here is a list of synergy discussions no doubt underway.

  • JP Morgan and Washington Mutual
  • Bank of America and Countrywide Financial
  • Bank of America and Merrill Lynch
  • JP Morgan and Bear Stearns
  • Wachovia and Wells Fargo

More Synergizing Coming

Still more synergy will come from hundreds of regional banks that have not yet gone under but will as the FDIC adds 54 more banks to its ‘problem list’

The Federal Deposit Insurance Corp. said Tuesday the list of banks it considers to be in trouble shot up nearly 50 percent to 171 during the third quarter — yet another sign of escalating problems among the institutions controlling Americans’ deposits.

The 171 banks on the FDIC’s "problem list" encompass only about 2 percent of the nearly 8,500 FDIC-insured institutions. Still, the increase from 117 in the second quarter is sharp, and the current tally is the highest since late 1995.

Banks that don’t make the list can end up collapsing anyway — the two biggest bank failures over the past year, Washington Mutual Inc. and IndyMac Bancorp, had not been on the FDIC’s list of troubled banks. Wachovia Corp., which nearly failed before it got bought by Wells Fargo & Co. in October, had not been on the list, either.

Recently, community banks — defined as those with assets under $1 billion — have started to show similar stresses as their larger counterparts, the FDIC said.

Downsizing On Top Of Synergizing

Of course we cannot forget just plain old fashioned downsizing as noted in Citigroup’s Town Hall Meeting

In yet another round of massive financial layoffs, Citigroup plans to cut about 50,000 jobs.

Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the bank’s workforce from peak levels reached in the fourth quarter of 2007.

In October, fellow blue chip American Express Co. (AXP) announced major layoffs, unveiling plans to slash 7,000 jobs. So far this year, Goldman has said it would cut 3,200 jobs, Whirlpool dropped the ax on 5,000, Yahoo cut 1,000 positions, and Hewlett-Packard shed 24,000 jobs.

Non-Financial Downsizing

After Christmas, expect to see massive job losses in commercial real estate, restaurants, and retail stores. Looking ahead there is no source of jobs anywhere to be found. Unemployment is going to soar.

Many who have not yet embraced frugality are going to have frugality embrace them.

Mike "Mish" Shedlock

 
 


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