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JPMorgan Chase officials met their newest employees Friday and began the complicated process of erudition what they bought after federal regulators seized Seattle-based Washington Mutual in the nation’s largest bank failure.
The New York bankers said it’s over early to know what the deal means for employees, branches and even WaMu’session headquarters city.
“We bid put on it Tuesday night, and the deal closed Thursday,” spokesman Tom Kelly said. “We’ve got a lot of toil to do.”
The complexus road in our teeth didn’t lay away real-estate and banking experts from speculating now.
“There are undoubtedly going to be job cuts,” said Bert Ely, a bank consultant in Alexandria, Va., but “it’s not like the pink slips are going to come instantly.”
JPMorgan also may render some hiring, Ely said, as it expands businesses in which WaMu was not particularly strong, such as commercial lending and wealth management.
The net effect will have being job losses, which have become sadly familiar at WaMu in recent years. Its ranks have dwindled from 60,798 employees in late 2005 to about 43,200 workers today, including more than 3,500 people in downtown Seattle.
JPMorgan bought WaMu largely because of its branches, particularly along the West Coast and in Florida. Charlie Scharf, head of retail banking at JPMorgan, said in a conference call Thursday that fewer than 10 percent of the combined branches would finish.
Scharf joins JPMorgan’s principal administrative officer, Frank Bisignano, in overseeing WaMu’s shifting.
They were among eight JPMorgan officials in Seattle on Friday to meet employees and get acquainted with the latest addition to the JPMorgan Chase empire.
At the same time, JPMorgan’s credit-card and commercial-banking chiefs were in California, where those operations of WaMu are based.
Branch closures are probable in the few markets in which place WaMu overlaps through JPMorgan — Houston, Dallas, Phoenix, Denver, Salt Lake City and the New York area — according to John McCune, head of research at SNL Financial in Charlottesville, Va.
The most profitable branches will stay open, whether they came from WaMu or JPMorgan, McCune said. “Generally, it’session some mix of both, and you solemnize the branches that put you in the best position in the market.”
Seattle office space
WaMu’s demise will further canker the downtown Seattle office market, already starting to suffer the effects of the national relating to housekeeping slide.
Commercial real-estate brokers said WaMu owns or leases nearly 1.6 million square feet downtown, further than any other company. That’s the equivalent of everything the office space in the Columbia Center, Seattle’session tallest erection.
JPMorgan acquired WaMu’s headquarters, the 42-story, 900,000-square-foot WaMu Center at Second Avenue and Union Street, completed two years ago.
WaMu also leases about 700,000 square feet in nearby downtown buildings, including the Washington Mutual Tower at 1201 Third Ave., the Newmark Tower and the 1111 Third Avenue Building.
If JPMorgan Chase cuts WaMu corporate staff in Seattle and large amounts of office space are put on the place of traffic, that could drive vacancy rates up and lease rates downward.
That, in turn, could help persuade developers with new downtown office projects in the pipeline to gripe from on construction.
WaMu already was giving in a backward direction. \ space in the van of its demise. Oscar Oliveira, senior vice president with brokerage Colliers International, said the bank had subleased about 200,000 one hundred superficial feet feet, and noiselessly was marketing an extra 350,000.
John Miller, manager of brokerage Cushman & Wakefield’s Seattle office, said the nationwide infrastructure of JPMorgan Chase means the impact probably will be more severe than on the supposition that WaMu had been taken excessively by a strange bank or private-equity investors.
Continued to commerce
Against total odds, WaMu shares continued to barter Friday. That’session because, while JPMorgan bought the company’sitting banking subsidiary, it left in the rear of the father holding company — a shell containing feeble more than a passel of nonbanking subsidiaries. The shares fell to 16 cents as 102 million changed hands Friday. Among stockholders hit by WaMu’sitting demise is the Washington State Investment Board, which said the utter failure will cost annuity and other types of funds it manages about $47 million, or 0.06 percent of its $78 billion in entire effects subordinate to management.
The table manages investments with respect to 17 of the whole not private pension funds as well as 21 other public funds. Last week’session bankruptcy filing by Lehman Brothers caused an estimated failure to win of about $130 the great body of the people, or 0.17 percent of total assets, the board said.
Millions for CEO
Alan Fishman, chief executive for 18 days preceding the federal sway took control, is eligible for $11.6 million in cash severance and can keep his $7.5 million signing honorarium, according to an analysis by James F. Reda & Associates, a compensation-consulting firm in New York.
Fishman, a former CEO of New York-based Independence Community Bank, took covering WaMu on Sept. 8 on the model of the ouster of longtime CEO Kerry Killinger. Fishman remains CEO of WaMu’s holding company, spokeswoman Darcy Donahoe-Wilmot aforesaid.
Killinger, who presided over WaMu notwithstanding 18 years, was entitled to $16.5 the public in cash severance, $14.9 a thousand thousand in deferred compensation and $7.5 million in estimated pension benefits, according to Reda. Killinger also left WaMu with company stock then worth about $5.1 million.
All told, Killinger received take-home remunerate totaling $98 million from 1994, the earliest year as being which data is available, through 2007, according to Equilar, an executive-compensation examination dense in Redwood Shores, Calif. He pocketed a total $22 million in 2006 and 2007 alone.
Among the losers in the collapse are the investors who in April put in $7.2 billion to bolster WaMu, paying $8.75 a share for stock and warrants potentially worth besides than half the company. Their pale is now gone. Affiliates of private-equity firm TPG, which led the deal, had $2 billion invested in WaMu. “Obviously, we are dissatisfied by the loss to our partners and ourselves,” a TPG spokesman said.
Pension claims
JPMorgan assumed the obligation to pay pension benefits to WaMu’s retirees, said Andrew Gray, a spokesman for the Federal Deposit Insurance Corporation (FDIC) in Washington, D.C. WaMu listed about 6,900 retirees on a 2006 IRS reporting form.
JPMorgan spokesman Kelly said Friday the bank is looking at every part of of WaMu’s benefit plans, and declined to say grant that the bank would pay the benefits. He called the issue a “very detailed question.”
According to regulatory filings, only a fraction of the pension plan was funded with WaMu stock, the detail said.
JPMorgan also assumed WaMu’s 401(k) plans during current employees, said the FDIC’s Gray.
One former WaMu employee in Boston, who said he was laid off late last year, wondered Friday what will happen to about $650,000 he was to receive in deferred salary, which employees utilize as being tax benefits.
The former employee, who asked that his family not be used, said he feared he was going to be “wiped out.”
David Barr, an FDIC spokesman in Washington, D.C., said deferred requital usually is treated as an unsecured right. As a result, WaMu employees by such compensation efficacy be out their money.
Kelly said the bank is looking at the question and ability have an make answer next week.
Seattle Times reporters Amy Martinez, Eric Pryne, Steve Miletich and Drew DeSilver contributed to this report.
Melissa Allison: 206-464-3312 or mallison@seattletimes.com
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