Bank of America reportedly has let go nearly 1,600 FleetBoston Financial Corp. employees in Massachusetts and Connecticut as a result of its acquisition of the Boston-based company, but has yet to disclose any layoff numbers.
Bank of America has yet to disclose the numbers and locations of recent layoffs of FleetBoston Financial Corp. employees despite repeated requests from the state of Connecticut and a flurry of publicity across the country. And they may never disclose those figures, according to a spokeswoman.
The Charlotte, N.C.-based bank, which earlier this year acquired Boston-based Fleet – the parent company of Fleet Bank – reportedly has laid off 1,500 employees in Massachusetts and 80 in Connecticut but insisted Tuesday that the numbers are lower.
Connecticut Attorney General Richard Blumenthal issued a statement on Aug. 18, the day the layoffs reportedly took place, lambasting the bank for not following through on earlier promises that levels of employment would be kept constant.
Gov. M. Jodi Rell also wrote a letter to the bank that day requesting information on the layoffs and questioning the bank’s commitment to Connecticut.
“I am disappointed and concerned by today’s news reports that Bank of America is planning to reduce jobs at its Fleet branches throughout the Northeast, including Connecticut, possibly as early as today,” Rell wrote. “We were surprised by this action, especially since my commissioner of banking had received verbal assurances from Fleet Bank executives that there would be no or minimum layoffs in Connecticut as a result of this merger.”
The following day, Blumenthal followed Rell’s missive with a letter to Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis asking him to be forthcoming and release the number of Connecticut employees who lost their jobs.
“Concealing this basic, simple information – vital to public policy and fair dealing – is incomprehensible and reprehensible,” Blumenthal wrote. “Secrecy about this issue is plainly unnecessary to any legitimate corporate competitive or individual privacy interests.” Blumenthal’s office hadn’t received a response as of Wednesday.
According to Linnea Walsh, spokeswoman for the Massachusetts Department of Labor and Workforce Development, as of Aug. 21 her office had not received any notice from the bank regarding layoffs and locations.
Massachusetts Attorney General Tom Reilly had made no public comment as of Monday, but the Massachusetts Division of Banks issued a letter Wednesday asking for information on the layoffs.
‘Self-Censorship’
Bank of America spokeswoman Alison Gibbs would not comment on why the bank won’t make public the number of layoffs.
“They do consider this information to be proprietary,” Gibbs said.
Bank of America offered to give Blumenthal the numbers, but only if he agreed not to release them to the public.
“Corporate representatives have offered to provide some information in a meeting next week, but only on the condition that I keep it confidential and decline to disclose it publicly,” Blumenthal wrote to Lewis. “I have categorically rejected such self-censorship. Obviously, I cannot keep secret this information, consistent with my moral and legal duties. Nor can you, in my view.”
The numbers could be released in the bank’s next quarterly filing in October, Gibbs said, but she added that the bank might never disclose the information.
Gibbs declined to tell reporters the specific number of layoffs, but did say it was “significantly less” than the number reported in other media outlets.
Cutting staff was likely an inevitability, according to John Carusone, president of the Hartford-based Bank Analysis Center.
“It’s clear Bank of America paid a high premium for Fleet,” he said.
To recover some of that premium, the bank had to cut costs, which invariably means cutting staff, Carusone said. But the bank’s failure to disclose numbers is odd for an institution that large.
“It’s unusual for a large institution to not be forthcoming with respect to the human fallout from the downsizing,” Carusone said, calling the bank’s actions “disingenuous.”
Clyde W. Barrow, director of the University of Massachusetts at Dartmouth’s Center for Political Analysis, called Bank of America’s actions “a little bit deceptive.”
Carusone doubts the situation will cost the bank many Fleet customers, but it could.
“From a PR standpoint, it’s a black eye to be disingenuous,” he said. “People aren’t going to think any more fondly of the organization.”
Barrow agreed, saying, “Banks don’t want bad publicity.”
Gibbs said research that Bank of America conducted upon its entry into the Northeast market found customers perceived the bank as “neutral to positive.” The bank also has a good reputation for customer service, she said.
Yet despite those claims, both Massachusetts and Connecticut insist the bank did not keep at least one promise.
In the Massachusetts Division of Banks decision that allowed Bank of America to acquire Fleet, the issue of a job creation plan is addressed.
“[The job creation plan] 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,” the decision reads. “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.”
Gibbs said a “customer-facing position” is “anyone who has direct contact with a customer.” The bank did cut employees with customer-facing positions last week, she said.
Gibbs explained the cuts were necessary because of the different corporate cultures between the two banks and to keep the cultures consistent between individual branches.
“In a branch network that big, it’s important to keep it consistent,” Gibbs said.
Bank of America has had success with a staffing model that places more emphasis on greeting customers when they walk through the door and requiring bank managers to spend more time on the floor, Gibbs said.
Bank of America originally made similar promises to Connecticut, according to Blumenthal’s Aug. 18 statement.
“The commitments made by Bank of America to me, both oral and written, were clear and concise: that current employment levels will be kept constant, if not increased, and no overall staffing numbers will be cut,” Blumenthal wrote.
Gibbs said that notion is accurate, because Bank of America will be adding positions over time.
“We are committed to maintaining job levels in the Northeast over time,” Gibbs read from a prepared statement. “As we have seen in the short run, there may be a small dip in employment levels, but we will maintain overall New England staffing levels over time.”
The bank is in the process of hiring hundreds of “premier bankers,” or employees who work with customers with a certain amount of assets.
“This may be people losing jobs, but we’re bringing in hundreds of premier bankers,” Gibbs said.
For those who did lose their jobs, Bank of America offered a severance package that ranged from 17 to 48 weeks, depending on an employee’s length of service.
But the Aug. 18 layoffs came at short notice, with employees being informed that day.
The lack of warning had two reasons, Gibbs said. One was that the bank assumed employees would not want to finish the workday with the knowledge it was their last. The other was out of consideration for the customers, Gibbs said.
It was unclear when Bank of America decided where and when the layoffs would occur, but it was sometime in the past six months, Gibbs said.
The Connecticut Department of Labor is seeking the layoff information to assure compliance with the federal Worker Adjustment and Retraining Notification Act. The act requires that if a company lays off a certain number of employees who work in the same location, the company must give that state’s Department of Labor and the employees a notice of 60 days.
“At this point, it’s not clear when the employees are being laid off and in what locations,” said Nancy Steffens of the Connecticut Department of Labor.
Walsh said there are concerns about whether a notification should have been issued because the numbers are still unclear.
If a company violates the WARN Act, any employees who have been laid off have the right to sue the company for 60 days’ worth of pay and benefits, according to John Chavez of the U.S. Department of Labor.
Gibbs, however, said no notifications were required for the recent layoffs.
The Connecticut Department of Labor offered to send its Rapid Response Team to educate the laid-off employees about unemployment benefits and retraining, but received no response.
Walsh said earlier this year, Massachusetts’ Rapid Response Team worked with the bank’s outplacement firm, but the team has not been asked directly to assist in the current round of layoffs.
