Wachovia’s (WB) disastrous acquisition of mortgage lender Golden West has saddled the company with billions of hobbled mortgage assets…and thousands of idle employees. Wachovia’s about to take care of the latter problem.
In the wake of growing losses on mortgage-backed assets, Wachovia has announced plans to cut more than 5,000 people out of 11,500 in its mortgage division (85% of which is Golden West). The cuts will come after October 1st, when an agreement WB struck with the California thrift on severance pay is set to expire. Charlotte Observer:
In late July, the bank said the layoffs would occur over the next two to three months, meaning some could occur in October. Bank spokesman Don Vecchiarello said he couldn’t say how many former Golden West employees would lose their jobs after Oct. 1 but noted that employees who are notified of a layoff by Sept. 30 would meet the deadline.
“Wachovia is committed to treating all of our employees with dignity and respect, and notifying them in a timely manner in the event of any displacements,” he said.
In negotiating the $24 billion sale, Golden West executives secured severance conditions that covered their employees but not their Wachovia counterparts. It’s not an unusual occurrence in bank deals. FleetBoston Financial Corp. executives won severance concessions when they agreed to sell to Charlotte-based Bank of America Corp. in 2003.
When the Golden West deal was announced, Wachovia said it planned to cut about 1,100 jobs from the combined company as it reduced overlapping positions. But with the latest cuts, Wachovia is now on track to eliminate about 8,100 mortgage positions, including attrition, since October 2006.
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