M&T Bank Corporation's (NYSE:MTB) proposed $7 billion acquisition of People's United Financial, Inc. (NYSE:PBCT) is sparking a new wave of apprehension among elected officials following an announcement that the transaction will result in nearly 750 job cuts in People's United home state of Connecticut and 256 positions in Vermont.
What Happened: The acquisition was announced in February, and the combined bank would have more than $200 billion in assets and a branch network spanning the Northeast and mid-Atlantic states.
M&T is headquartered in Buffalo, New York, and People's United's central base in Bridgeport, Connecticut, was designated as the Northeast regional headquarters for the combined bank.
However, the initial announcement of the acquisition did not offer details on which jobs would be retained and which would be eliminated. M&T alerted the Connecticut Department of Labor last month that 747 positions in Connecticut were going to be eliminated, including 661 positions in Bridgeport. The job cuts were scheduled to begin Oct. 1 and conclude by May 22, 2022.
What Happened Next: Connecticut's elected officials reacted to the depth and scope of the proposed job cuts with outrage and concern.
Connecticut Attorney General William Tong sent a letter to M&T Bank Chairman and CEO René Jones and People's United President and CEO John Barnes demanding an explanation on what he described as a "shock to many."
"The impression you created was that job losses would be minimal and that the merged bank would continue to partner with local communities, the City of Bridgeport, and the State of Connecticut and would otherwise fulfill its obligation to be a responsible corporate citizen," Tong wrote. "I would like to provide you with the opportunity to explain your prior assurances and put your commitments in writing to the Attorney General's Office that the merged bank will retain a large majority of People's Bank employees."
Bridgeport Mayor Joe Ganim directed the city's Finance Department to begin the process of relocating $50 million in municipal funds on deposit at People's United into another bank. Ganim accused the banks of demonstrating "corporate irresponsibility and lack of transparency."
Gov. Ned Lamont's office issued a statement pledging that his administration would "remain in contact with all parties to further minimize job loss and ensure the bank fosters a true partnership with the city of Bridgeport and has a presence in Bridgeport's communities."
In contrast, neither Vermont Gov. Phil Scott nor state Attorney General T.J. Donovan have issued any public comment on the proposed layoffs within their state.
In response to the concern from the elected officials, M&T issued a statement insisting that nearly 80% of People's United employees would retain their jobs, adding that the elimination of positions was "necessary to remain competitive within the broader marketplace, reduce costs over the long-term, and avoid overlap following transaction close."
M&T originally announced its expectation for the transaction to close in the fourth quarter, following regulatory approval of the deal. Shareholders in the two banks have already approved the transaction.
Photo: Gerd Altmann / Pixabay.