Despite no 'mass layoffs' message, BB&T is cutting jobs
Posted January 9, 2009 2:51 p.m. EST
Updated January 9, 2009 4:13 p.m. EST
Raleigh, N.C. — BB&T, North Carolina’s third-largest bank, is laying off an unspecified number of employees and is leaving some positions vacant after employees leave or retire as it grapples with the recession gripping the U.S. economy.
The cuts, including some announced this week, are taking place despite recent assurances from BB&T (NYSE: BBT) executives to employees.
“The message for the last several months has been that ‘we don’t foresee any mass layoffs,’” BB&T Senior Vice President Bob Denham told WRAL.com in an interview Friday. “Maybe that wasn’t a good way to say it.
“Our point has been that mass layoffs were not going happen at this bank like at some others that have cut thousands of jobs. But there are no guarantees that positions will not be eliminated and employees not be impacted.”
In October, BB&T accepted $3.1 billion from the federal government as part of the U.S. efforts to infuse capital into the nation’s financial system. Since that time, Denham said BB&T has lent more than half those funds.
Like other banks, BB&T has not escaped Wall Street scrutiny. On Jan. 6, analyst firm Sandler O’Neill cut BB&T’s stock to “sell” from “hold.”
Mike Walden, an economist at North Carolina State University, said BB&T’s cost-cutting was not a surprise.
“BB&T is considered a strong institution,” he said. “I assess their downsizing to be related to the weak economy and lack of lending opportunities.”
As the recession deepens, and with many economists saying the downturn won’t end until much later this year, Denham said BB&T had no choice but to review budgets and expenses.
“We have to do everything that is necessary,” he said. “It’s important that all companies do what they can (to) stay above water.”
Positions being cut or frozen “run the whole gamut” from teller jobs to some “at the home office,” he said.
However, the Winston-Salem-based bank, which employs some 31,000 people, has not closed any branches and has not mandated job cuts or specific budget reductions, Denham explained.
BB&T also continues to hire “on a selective basis” and would consider possible acquisitions as the troubled U.S. financial sector continues to tremble in the wake of last September’s Wall Street meltdown, Denham added.
“Some people were told this week that their positions were being eliminated,” Denham said. He also said some employees are being asked to work in different cities or at different branches. “This was not easy” he added. “Some of these people were very good employees.”
“We don’t know the number,” he asked when how many people had been let go. “We don’t know the percentage of employees that will be affected.”
Kelly King, a Raleigh native and longtime BB&T executive who took over as CEO on Jan. 1, has instructed managers to review budgets, Denham said.
“Managers have been given mandates to find ways for how we could be more efficient,” Denham explained. Since the budget planning cycle for 2009 started last fall, Denham said managers have been asked to rework them “five or six times.”
Pointing to the financial chaos that consumed Wachovia, which is now part of Wells Fargo, Dehnam said BB&T is reviewing its operations in order to avoid a similar situation.
“If we don’t do it,” he said, “that is what happened at Wachovia. If you don’t control costs and run a good business, then everybody is basically told to go home.”
In making work force reductions, Denham said the bank has sought “to gain efficiencies” primarily through attrition and retirement.
“We are looking to achieve savings through attrition – that’s the No. 1 goal,” he said. “We have been going through that process for a few months now.”
Denham said BB&T “probably ranks in the top 1 percent” of U.S. banks in terms of financial health, but acknowledged a slowing economy has hurt.
“The reason we’re doing that is we are not unlike any other financial institution in the U.S.,” he said. “We certainly have not gone unscathed.”
Shares of BB&T, which is set to announce fourth-quarter earnings in the next few weeks, traded at just over $23 on Friday. That’s nearly half what the stock sold for last September.
BB&T is one of North Carolina’s largest public companies, with a market capitalization of nearly $13 billion. It operates some 340 branches across the state, including 46 in the Triangle.
Bank of America and Wells Fargo are the state’s top two banks.