Pink slips are piling up at Capital One Bank. The financial institution is eliminating hundreds of positions in an ongoing cost-cutting and reorganization of its retail banking operations, according to company officials.
The latest move involves cutting nearly 500 assistant branch managers throughout the McLean-based bank’s 985 locations in its northeast, mid-Atlantic and southern regions. Of those employees discharged, 166 are in the Washington area.
The bank based its decision on the branch size, number of transactions and complexity of operations, spokesman Steve Schoof said. Affected employees have been given the option of applying for other positions within the company or accepting a severance package.
Weeks earlier, Capital One informed staff that it was removing an entire layer of management to simplify its organizational structure. The company previously focused on 14 sub-markets within three geographic regions, it now centers around eight expanded regions.
Each of those eight regions will be led by a “local distribution executive.” George Swygert, former Wachovia regional president of retail banking for greater Washington, will oversee the Maryland-D.C. region. Virginia, meanwhile, will be in the hands of Kimberly Conte, who previously served as vice president and regional executive at Capital One. Officials at the bank would not make any executives available for comment.
Swygert and Conte will report to Ken Kido, who joined the company last fall as senior vice president of local distribution. Kido is responsible for leading the bank’s branch operations and speciality sales. He reports to Jonathan Witter, regional president of the mid-Atlantic as well as president of retail and direct banking.
Witter became the head of retail banking last May, when Lynn Carter stepped down as president of the bank. Her duties were dispersed to Witter and Michael Slocum, who now run the bank together.
As a result of the regional restructuring, 29 positions have been phased out, including district managers and market presidents. Four area executives were affected by the changes, including Denise Pope, who was a prominent director at Chevy Chase Bank.
“In order to grow its network in a challenging economic environment, the bank requires a leaner and more efficient operating model,” Schoof said in an e-mail.
In its most recent earnings release, Capital One reported a 25 percent jump to $2.6 billion in non-interest expenses in the fourth quarter. The bank attributed the surge to rising marketing and operations costs tied to the integration of prior acquisitions.
Capital One’s rise to become the nation’s fifth largest bank in less than a decade was fueled by a string of bank purchases — Hibernia, North Folk Bank and Chevy Chase — that have led to continuous reconfiguration.
“Capital One, when compared to its peers, has gone through much more transition than anyone else, and I suspect that is leading to a lot of internal changes,” local banking expert Bert Ely said. “To the extent that they’ve merged banks with different management styles, they’ve had that issue to deal with too.”
All of those mergers have led to the departure of executives from the acquired banks. A number of former Chevy Chase workers left to join Burke & Herbert, EagleBank and Wells Fargo. Capital One, however, has picked up its share of refugees from other merger and acquisitions, including Swygert.
Meanwhile, expenses incurred from the recent $9 billion acquisition of online bank ING Direct likely factored into Capital One’s cost cutting, said analyst Scott Valentin of FBR Capital Markets.
“With the approval on ING, the Fed wanted to see more robust internal controls, policies, procedures. That was one of the reasons Capital One cited for the increase in expenses in the fourth quarter,” he said.
Valentin anticipates further cost cutting at the margins, if there is further pressure on revenue. He said Capital One’s revenue outlook is improving amid continued, albeit nominal, loan growth.
Positions phased out, including district managers and market presidents, as part of the bank’s restructuring.