SunTrust Banks to cut 2,400 jobs
NEW YORK (Reuters) - SunTrust Banks Inc (STI.N), the seventh-largest U.S. bank, said on Monday it expects to eliminate about 2,400 jobs by the end of next year as part of a plan to save $530 million annually by 2009.
The job cuts equal about 7 percent of SunTrust's year-end work force of 33,599 people. Atlanta-based SunTrust expects the cuts to reduce pretax earnings by $45 million this quarter.
Like many rivals, SunTrust has faced rising credit losses and a difficult interest-rate environment that has hurt lending margins.
Chief Executive James Wells, who took his job in January, is trying to make SunTrust more efficient after the bank tripled in size under predecessor L. Phillip Humann.
"It may help offset some of the challenges presented by the yield curve and the credit environment," said Bill Fitzpatrick, an analyst at JohnsonFamily Funds in Racine, Wisconsin, which invests $1.8 billion and recently sold its SunTrust shares. "It could make the bank more attractive to potential buyers because it is getting costs down."
SunTrust said most of the cuts will involve employees who do not deal directly with customers. The cuts follow a review begun several months ago of how to streamline back office and support operations, and reduce layers of management. The job losses will not affect its ability to generate revenue, it said.
Spokesman Barry Koling said about 1,600 jobs are being eliminated this year, including at least 600 through attrition. Some of next year's job cuts will also be through attrition, he said.
Koling said the cuts stem from "a broader shareholder value program conceived long before the current credit market-related industry firestorm surfaced."
SunTrust previously instituted a hiring freeze, agreed to sell and lease back 475 offices and branches, and sold 4.5 million Coca-Cola Co (KO.N) shares, or 9 percent of its stake.
It said it would decide this year what to do with its remaining 43.7 million shares in Coke, the world's largest soft drink maker, which it helped take public in 1919.
In the second quarter, SunTrust profit, excluding the Coke sale, fell 3 percent from a year earlier to $528.3 million, though it topped the average analyst estimate. Including the Coke sale, quarterly earnings rose 24 percent.
SunTrust ended June with $180.3 billion in assets, and operates about 1,685 branches in 11 U.S. states, mostly in the Southeast, and Washington, D.C.
Larger rivals in the midst of multiyear cost-cutting programs include Citigroup Inc (C.N) and Wachovia Corp WB.N.
Shares of SunTrust fell 80 cents to $79.70 in afternoon trading on the New York Stock Exchange. Through Friday, they had fallen 5 percent this year, compared with a 6 percent drop in the Philadelphia KBW Bank Index .BKX.
