JOHN F. QUINN
Fleet layoffs call merger into question
ACTIONS SPEAK louder than words -- and Bank of America's layoffs this week are another example of its failure to live up to commitments made prior to receiving state regulatory approval to merge with Fleet Bank.
When it first announced the planned merger, Bank of America was jubilant that it would become part of the venerable Boston banking establishment. But it has yet to show that it is worthy of such membership.
Massachusetts law requires bank mergers to be approved by the Board of Bank Incorporation. The board must not only determine that competition will remain reasonably unaffected and that public convenience will be promoted, but also that "net new benefits" will flow from the transaction. Those benefits might include capital investments, increased or enhanced consumer or business services, commitments to open or maintain branches, and job creation.
The board held a public hearing on the Bank of America/Fleet merger on Jan. 27. Because of the state's challenging economic climate, the board looked intensely at the employment impact of the deal.
Bank of America, in its written and verbal testimony, led the board to conclude that "[t]he Petitioner has addressed the issue of job creation plans in submitted documents and oral testimony. It again stresses that the lack of overlap in banking offices in Massachusetts distinguishes it from other recent large transactions which have come before the Board. For that reason it states that all "customer facing positions", which is a significant number, will be retained. Bank of America acknowledges that there will be some reduction in the workforce in the short term from redundancy of other operations."
The board also raised concerns regarding employment in the Commonwealth and questioned Bank of America on its projections of after-tax savings of $1.1 billion if the merger was approved.
According to the board's decision approving the merger on March 31, the bank answered those concerns by responding on several different fronts that "employment levels would be maintained" and testified that it was committed to maintaining FleetBoston's current level of employment.
So this raises the question: Are the tellers and customer service representatives who were laid off this week in "customer facing positions" or not? And if they are, why did Bank of America testify that they "actually believe that what you will see is growth in customer facing positions, which means better capabilities to deliver all of the net new benefits."
Was this intentional misrepresentation in order to get the merger approved, or a change in strategy after the approval was received? Only Bank of America can answer that question.
The layoffs come on the heels of another questionable employment decision in which Bank of America outsourced 375 jobs to Fidelity for human resource work, including payroll and retirement plans. The outsourcing of these jobs is not the issue at hand but rather that Bank of America is actually counting the Fidelity employees as their own employees for purposes of maintaining employment levels in New England.
Likewise, in contrast to its pre-merger candor, Bank of America has been less than forthcoming about its recent actions, so that the actual number of layoffs remains in question.
Bank of America, in its quest to absorb Fleet, minimized the prospect of job losses. Now, with this recent layoff, it appears that the bank has failed to do what it promised to do. Unfortunately, this is all too common in corporate America these days. In this era of "bigger is better" in the business world, the real losers are the employees who are shifted around from office to office or city to city like pawns in a chess game -- or just lose their jobs altogether.
Bank of America has indicated that "over time" the net job losses will be reduced by its rapid growth and expansion in the New England Market.
Tell that to the people who are waking up this morning with no job and a family to support.
State Representative John F. Quinn (D-Dartmouth) is House chairman of the Joint Committee on Banks and Banking.
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