Synchrony to Reduce Real Estate, Cut Jobs to Lower Expenses

(Bloomberg) -- Synchrony Financial will exit some of its leased properties and begin cutting jobs to lower costs in response to the Covid-19 pandemic.

The decisions are part of a strategic review that the bank started in July, Synchrony said Monday in a regulatory filing. The actions could cause the company to record restructuring charges of as much as $110 million in the third quarter.

“We’ve all had an opportunity to really re-look the whole work-from-home scenario, and I think probably all of us are pleasantly surprised at how well it’s gone,” Chief Executive Officer Margaret Keane said Monday at an investor conference. “We’ve made a decision to really accelerate that.”

In addition to its corporate headquarters in Stamford, Connecticut, Synchrony leases offices in nearly two dozen cities around the world, including Phoenix; Charlotte, North Carolina; and Canton, Ohio.

Synchrony, the largest provider of store credit cards in the U.S., has been hit hard by the pandemic, which forced many of its retail partners to shutter stores across the country and crimped consumer spending nationwide.

Credit-card companies have been puzzled by stubbornly low write-offs despite the high U.S. unemployment rate. Synchrony said separately on Monday that a smaller percentage of customers are falling behind on their payments. The firm’s delinquency rate in August dropped 180 basis points to 2.6%.

Even so, the company has begun reducing credit lines for some customers, and, in some cases, downgrading customers who have a co-brand card to private label cards with smaller limits that can only be used at certain retailers.

“Many of us think there’s going to be another wave of layoffs,” Keane said. “We’re being very cautious and thoughtful.”

The cost cuts could help Synchrony save $150 million to $250 million next year, Chief Financial Officer Brian Wenzel said at the conference.

“It’s really easy to start cutting,” Keane said. “That’s not our approach. We’re being really surgical about it.”

©2020 Bloomberg L.P.