Fifth Third to Reduce Jobs and Branches Post MB Acquisition
Fifth Third Bancorp’s FITB decision to buy MB Financial has brought to the fore plans to slash about 500 jobs in Chicago area and close some branches. The bank primarily aims to remove back office and administrative positions that are being duplicated on account of the merger.
Per an article by Chicago Tribune, the bank has informed the Illinois Department of Commerce and Economic Opportunity that it will to begin layoffs in May. Most of the reduction will be done in Rosemont with about two dozen in MB Financial’s previous headquarters.
Further, 47 branches in the Chicago area will be shut down as an outcome of the deal. Though the company has not disclosed which branches are to be closed, it is targeting those that are in close vicinity to each other.
Most of the cuts will take place in the next four months, and Fifth Third is offering severance benefits and outplacement services to employees who are losing their jobs.
The acquisition of MB Financial was announced in May 2018, and is expected to deliver significant financial benefits to the company. The merged entity is expected to record an internal rate of return of about 18.5% and be accretive to Fifth Third’s operating EPS in the first year. Moreover, accretion of about 7% is projected in the second year on realization of full cost savings.
Fifth Third’s efforts to expand geographically and bolster operations bode well for its financials. Further, it remains focused on strategic investments through North Star initiatives, which are expected to result in revenue growth, expense savings and drive efficiency.
The stock has gained around 7.5% over the past three months, underperforming 8.5% growth of the industry.
Currently, Fifth Third carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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