Bridgeport will pull money out of People’s United Bank
Legislator demands hearing in response to planned layoffs after merger
Anger over hundreds of the layoffs planned in M&T Bank’s acquisition of People’s United Bank intensified Wednesday, prompting one state senator representing Bridgeport — the city hardest hit by the job cuts — to push for legislative hearings.
“Bridgeport has been a community that has suffered from not only from health issues from COVID-19 but also health disparities raised by the coronavirus pandemic in relation to Black and brown people,” Sen. Marilyn M. Moore wrote to the legislature’s banking committee Wednesday. “With the news of almost 700 people losing their jobs in Bridgeport, something must be done.”
M&T Bank, based in Buffalo, New York, disclosed in a labor department filing last week that 747 jobs would be cut in Connecticut in its $7.6 billion acquisition of
People’s United, one of Connecticut’s oldest and largest lenders. The bulk of the layoffs — 661 — would strike People’s United’s Bridgeport headquarters on Main Street.
Bridgeport Mayor Joseph Ganim on Tuesday vowed to pull more than $30 million in city funds deposited with People’s United.
“I would not discourage anyone else from doing the same thing, in other words, taking their funds out of this institution, which I have no comfort or faith in their transparency or their integrity,” Ganim said.
Moore said People’s United, employing about 5,600, has served as a community partner supporting non-profits and local businesses.
“The impact of these layoffs will have a great economic impact on families and local small businesses who many of the employees frequent,” Moore wrote. Moore noted she had expected a similar relationship with M&T as the city has historically had with People’s United.
“… these layoffs signal a different relationship and culture with the city and the community,” Moore wrote. “This instills fear among thousands of employees in our state. It causes families to worry if they will have a way to put food on the table and pay their bills.”
M&T touched off a firestorm over the weekend after it disclosed to the state labor department that it would cut the jobs, starting Oct. 1 and continuing through May 2022. Dozens of workers in downtown Hartford are also affected.
U.S. Sen. Richard Blumenthal issued a strong statement Saturday decrying the job loss as “deeply alarming” and said he was considering seeking federal and state regulatory action. Shareholders of both banks have approved the acquisition, but regulatory approvals are still pending.
In response to the call for hearings Wednesday, M&T issued a statement saying they were “in contact with the mayor’s office as well as other officials to discuss the impact on the city and our plans to build a strong and sustainable relationship.
“We are committed to continuing to work with employees and community leaders to minimize job loss and will ensure that any impacted employees are given both generous severance benefits and assistance to find their next opportunity,’’ the bank said.
On Monday, M&T maintained that Bridgeport would be the combined banks’ New England headquarters, a hub for future growth and the addition of jobs. M&T said it would retain 80% of People’s United employees overall, including “substantially all” branch employees. Workers at branches in Stop & Shop supermarkets, a network that is now being phased out, also would keep their jobs.
M&T also has said laid-off workers would get priority in applying for 1,500 open positions in M&T’S existing Northeastern market.
Connecticut Attorney General William Tong said Wednesday he is “deeply concerned” about the potential job loss, especially as Connecticut residents are still recovering from income loss in the pandemic.
“We are reviewing the terms of the acquisition with the department of banking, as we understand that M&T has committed to giving People’s United employees first priority for open positions,” Tong said. “Our office will be watching that process closely and keeping all legal options open to protect Connecticut jobs.”
Ganim said Wednesday the magnitude of the layoffs took him by surprise. Soon after the $7.6 billion acquisition was announced in February, Ganim said he was visited by executives of both banks who gave him reassurances about the commitment to Bridgeport.
“The key line was, ‘... Bridgeport is going to be our New England headquarters so I wouldn’t worry about displacement, about job loss or those types of things,’ “Ganim said. “‘We’re very committed to this.’ And then they turn around and do this.”
After the filing disclosing the job cuts, Ganim said he and the city’s finance director made the decision to pull the funds and, on Wednesday, the city was looking at other options.
Ganim said it was shocking to contrast the prospect of the layoffs with the payouts that would go to senior-level executives selling the bank. People’s United chief executive Jack Barnes alone could reap $34 million.
In bank mergers, it is typical that overlapping corporate, administrative and back office jobs — many of them concentrated in the headquarters of the acquired bank — are on the chopping block.
The attraction in bank mergers is to scoop up big portfolios of customers, but also save money by cutting overlapping jobs and branch offices. In the People’s United acquisition, there is little overlap of branches except in Fairfield County.
From the start of the acquisition pairing, it was clear that job cuts loomed. M&T and People’s United said they expected to save $330 million a year in costs, about 30% of operating expenses at People’s parent company, People’s United Financial Inc.
M&T Bank, which has 11 branches in Fairfield County, could scoop up 419 People’s United branches in five New England states, including 170 in Connecticut and New York. The acquisition would allow M&T to extend its reach deep into New England and quickly bulk up on $60 billion in People’s United assets, $52 billion in deposits and $44 billion in loans.