Magazine article American Banker

Republic N.Y. to Take $97M Charge, Chop 10% of Staff

Magazine article American Banker

Republic N.Y. to Take $97M Charge, Chop 10% of Staff

Article excerpt

By LIZ MOYER In a reaction to last summer's market tumble, Republic New York Corp. said Monday that it would take a $97 million pretax charge in the current quarter and eliminate 10% of its work force. The bank said it would realize $42 million of cost savings this year and $67 million annually beginning in 2000. "We will focus the corporation's resources on growing its core business, private banking," said Dov C. Schlein, vice chairman of the holding company and president of its lead bank. The restructuring charge and an additional $7 million of expenses for the phaseout of some employee benefits programs could wipe out Republic's first-quarter earnings, analysts said. Republic posted a $92.7 million loss in the third quarter last year because of trading losses in Russian government securities. Profits rebounded in the fourth quarter, but the damage was already done. Net income for all of 1998 was off 45%, to $248 million. Analysts said confidence in Republic had been shaken by the losses and by a management shuffle in January, when Robert Cohen, the vice chairman of global private banking, suddenly resigned to pursue other interests. "The company has been in a state of turmoil," said Marni Pont O'Doherty, an analyst at Keefe, Bruyette & Woods Inc. "They are trying to find a place for all the pieces." Analysts said this latest retrenchment, which was widely expected, marks an important milestone for the $50.4 billion-asset Republic. It had built a reputation for conservative management, only to stumble in recent months from trading activities. "Private banking has always been at the center of their strategy, but now it is even more important," said Gerard Cassidy, an analyst with Tucker Anthony Inc. The bank said it would also focus on consumer financial services and niche lending, foreign exchange, and precious metals businesses. …

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