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Thursday, Nov 30, 2023


Washington Mutual hasn’t wasted any time taking charge at Great Western Financial Corp.

In the four months since Washington Mutual acquired Great Western, it has handed pink slips to nearly 400 employees at Great Western’s Chatsworth headquarters campus.

Great Western’s new bosses insist they are moving cautiously on future cuts, seeking to avoid the kind of rapid staff cutting that occurred following Wells Fargo & Co.’s acquisition of First Interstate a year earlier.

While the first 220 jobs cut in July and August were all among Great Western’s senior-level executives, the latest 167 positions were spread across nearly all levels of the company, said Great Western spokesman Tim McGarry.

Hardest hit last month was the data-processing department, from which 22 positions were eliminated.

Washington Mutual also has said it might close as many as 100 branches of Great Western and American Savings out of a total of 416. (Washington Mutual bought American Savings in December 1996.)

The closures will be made among branches of the two franchises that are within close proximity of each other, McGarry said. An announcement on closures will be made early this month, while a clearer picture of the long-term staffing situation at the Valley headquarters campus should be available by the end of the year, he said.

While conceding that the number of positions eliminated through closures will probably exceed the job cuts so far, McGarry stressed that attrition should minimize the need for layoffs by the time they are carried out next year.

Despite the cuts, Washington Mutual says it intends to retain the Great Western nameplate in California and Florida and could eventually expand the franchise by merging it with American Savings.

Analysts and officials with Washinton Mutual agree that the bank is making efforts to ingratiate itself with Great Western employees, even those about to lose their jobs.

“Washington Mutual is going out of its way to communicate as well as it can with Great Western employees. They don’t want to make the same mistakes Wells Fargo did with First Interstate,” said Charlotte Chamberlain, banking analyst at Jefferies & Co.

Heavy-handed layoffs by Wells not only prompted other First Interstate employees to jump ship, it compelled thousands of account-holders to shift their business to other banks, analysts say.

Washington Mutual does not want to replicate that scenario.

“They are coming in here and doing these things very carefully. The feeling is that doing it right is more important than doing it rapidly,” McGarry said.

To soften the pain of job losses, employees receiving pink slips are getting severance packages granting them their regular pay for six months to 18 months after separation.

If there has been a complaint by employees, it’s that the downsizing is going too slowly, creating a companywide sense of uncertainty. He said the hard-fought battle between Washington Mutual and H.F. Ahmanson & Co. over acquiring Great Western is partially to blame.

“Because the takeover fight was so intensive, (Washington Mutual) couldn’t make too many plans,” he said.

As part of a damage-control campaign, Washington Mutual’s Chairman and Chief Executive Kerry Killinger has been touring Great Western facilities to meet employees.

The layoffs are leaving behind plenty of vacant offices at Great Western’s sprawling 15-building campus in Northridge and Chatsworth, raising questions about the future of the facility.

The 10-story tower that dominates the local skyline still bears the Great Western nameplate and there are no plans to remove it any time soon, McGarry said. He did not rule out the possibility, however, that other tenants might lease part of the headquarters campus property.

Real estate agents say Great Western is still in the process of evaluating how much property it will eventually put on the market.

There is also the possibility that the layoffs will in time be offset by new hires in other functional areas due to improved business performance.

According to Washington Mutual, Great Western has seen a net increase of 25,000 accounts since it began offering free checking at the start of October.

Analysts concur with the numbers.

“Washington Mutual is excellent at marketing. They have done well in generating new accounts in Washington and I’m sure they will do well in Los Angeles,” said Joe Morford at Alex. Brown & Associates in San Francisco.

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