CHARLOTTE, N.C. — Bank of America Corp. said Monday
that the first phase of its cost-cutting program is expected to
eliminate 30,000 jobs over the next few years.
The
reductions will come in consumer banking and other areas covered by the
first phase of the program, called Project New BAC after the bank’s
stock ticker. The bank said attrition and the elimination of
“appropriate unfilled roles” will be a “significant part” of the
decreased number of jobs.
The Charlotte bank employs about 288,000 worldwide; the job cuts would equal a little more than 10 percent of the workforce.
At
an investor conference Monday morning, Bank of America Chief Executive
Brian Moynihan said the bank planned to slash $5 billion in annual
expenses in the first phase of the efficiency program.
The
reduction amounts to 18 percent of the $27 billion in expenses Bank of
America tallied for consumer banking, credit card, home loans,
technology and operations and other support functions in the year that
ended March 31. The cost savings will be fully achieved by the end of
2013, Moynihan said at an investor conference in New York.
The
bank will begin the second phase of the cost-cutting initiative, called
Project New BAC, next month. That part of the program addresses $28
billion in annual expenses for commercial banking, wealth management,
capital markets, corporate banking and support functions.
That part of the program is likely to produce less cost-cutting because of higher employee compensation, Moynihan said.
Nancy
Bush, a contributing editor at SNL Financial, said she expects a
“somewhat smaller number” of job cuts from the second phase of the
cost-cutting initiative, compared to the first, citing the importance of
staying competitive in investment banking and other areas.
Overall,
Moynihan’s remarks Monday morning will probably provide ammunition both
to Bank of America’s supporters and its critics, Bush said.
“He
tried to sort of put parameters around the issues (facing the bank),
but of course those parameters can change tomorrow,” she said. “For
people like me who believe they do have sufficient capital, I think he
answered the capital question. For others … you’ve got the mortgage
issues. Here’s their reserves, and they’re not big enough.”
Asked
about putting Countrywide Financial into bankruptcy, Moynihan said “we
look at all of our options,” but declined to comment further.
Countrywide, which Bank of America bought in 2008, has produced billions
of dollars in losses in recent quarters as the bank faces requests by
investors to buy back soured mortgage loans sold by the lender during
the housing boom.
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©2011 The Charlotte Observer (Charlotte, N.C.)
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