Bank of America to Lay-Off 30,000 Workers

BringDownMugabe · Sep 12, 2011

Bank of America to slash 30,000 jobs in cost-cutting plan
By Hugh Son, Dawn Kopecki and Max Abelson, Updated: Monday, September 12, 12:56 PM
Sept. 12 (Bloomberg) -- Bank of America Corp., the biggest U.S. lender by assets, will eliminate 30,000 jobs in the next few years as part of Chief Executive Officer Brian T. Moynihans plan to bolster profit and the companys stock.

The reductions, equal to about 10 percent of the firms workforce, are part of the first phase of an overhaul that aims to remove about $5 billion in annual costs by the end of 2013. Moynihans plan, dubbed Project New BAC, included a management shakeup last week that elevated Thomas K. Montag and David Darnell to co-chief operating officers and left Sallie Krawcheck and Joe Price without jobs.

We dont have to be the biggest company out there, we have to be the best, Moynihan, 51, said today at an investor conference in New York. We can get out of things we dont need to do, make the company leaner, more straightforward, more driven.

Bank of America announced the job cuts in a statement minutes after President Barack Obama began delivering remarks about his efforts to increase employment. The Charlotte, North Carolina-based company is seeking to shave about 18 percent of $27 billion in consumer-related expenses, Moynihan said.

The bank advanced 7 cents, or 1 percent, to $7.05 at 11:19 a.m. in New York Stock Exchange composite trading, the best showing in the Dow Jones Industrial Average. The company already ceded the title of largest home lender to Wells Fargo & Co., and slipped to No. 2 in deposits at midyear behind New York-based JPMorgan Chase & Co.

Efficiency Ratio

As of June 30, Bank of America still ranked as the largest employer among U.S. lenders with about 288,000 people. San Francisco-based Wells Fargo, which has the largest branch network, and New York-based Citigroup Inc. are next largest, with more than 260,000 employees. JPMorgan, the most profitable U.S. bank, had about 250,000 workers.

The first phase of Project New BAC focuses on consumer banking, credit cards, home loans and technology, Moynihan said. The second phase will begin in October and continue through March, covering other businesses and operations, according to the firms statement.

When you take Phase 1, and combine with Phase 2, we feel comfortable well get back to the 55 percent efficiency ratio we talked about in March, Moynihan said.

Profit Under Pressure

Moynihan has sought to bolster capital at the bank and confidence among investors after a 54 percent slide in the stock from the time he became CEO in January 2010 through last week. His tenure includes posting a record $8.8 billion quarterly loss, committing $30 billion to clean up faulty mortgages and selling at least $40 billion of assets and preferred shares.

Profit is under pressure mainly because of losses, legal costs and writedowns tied to the 2008 takeover of subprime lender Countrywide Financial Corp. At the same time, revenue is shrinking as the U.S. economy slows. Moynihan has said that because the bank is one of the biggest consumer lenders, its fortunes are closely tied to home prices and the jobless rate.

About four dozen of the banks top executives met last week to review Project New BAC, named after the companys stock ticker symbol, a person familiar with the plan had said. Moynihan told investors on Aug. 10 that money saved from the initiative will be both material and substantial, which the bank needs as the economy slows and new federal regulations cut revenue.

The multi-month effort behind Project New BAC is a way of reengineering your processes, particularly appropriate for a company thats a product of mergers and integrations, according to Alastair Borthwick, co-head of global capital markets and a participant in the planning.

Too Much Information

For example, the managers found that the companys internal financial reporting has a high degree of frequency, a high degree of completeness, and a high degree of detail, Borthwick said in an Aug. 31 interview. What were asking is, can we live with fewer, smaller, less-detailed reports across the entire firm?

Borthwick realized in his own European equity business that he was getting daily reports describing what had happened that day. They were so extremely well-written and incredibly precise that he figured someone was spending an hour or more a day on them. From his desk at One Bryant Park in New York one July day, he hit reply-all after getting his daily report and requested that the notes stop or say simply that nothing material had happened, or be written periodically only if there were important news.

Stock Slide

If I and my colleagues can live with 20 percent less reports, and the 20 percent less time spent on those activities, then it allows your finance teams to get after higher-value- added activities.

Bank of America fell 48 percent this year through last week, the worst performance in the Dow average and 24-company KBW Bank Index, as investors focused on costs tied to the Countrywide takeover and speculated the firm may issue new shares to boost capital. Last month, American International Group Inc. added to the woes, suing to recoup at least $10 billion in losses on mortgage bonds. Bank of America said AIG was to blame and that the New York-based insurer was an informed, seasoned investor.

Such disputes will take a lot longer -- and its in our best interest to have it take longer, Moynihan, who has a law degree and served a stint as general counsel, said in a Sept. 6 interview. You have to chop away at them, as the legal teams will do. Its going to stay with us for a long time because its not in our best interest to do something there until we chop the cases down and get people to be more realistic.

Previous Job Cuts

In an Aug. 18 memo, Moynihan disclosed 3,500 job cuts that will affect operations across the firm and include as much as 5 percent of the investment-banking unit, or about 600 people, two people with knowledge of the plans said last month.

This obviously is a challenging time for our company in the markets, and for our shareholders, Moynihan said in the memo. I know it is tough to have to manage through reductions, but we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully.

Bank of America leaders had been fighting a different battle before, and that was to gain scale, Moynihan said in the interview. His predecessor, Kenneth D. Lewis, spent more than $130 billion assembling a company with leading positions in deposits, credit cards, mortgages, investment and corporate banking and wealth management. The firm had $2.26 trillion in assets as of June 30.

One of Moynihans decisions -- to get out of managing private-equity investments gained in the 2009 acquisition of Merrill Lynch & Co. -- has saved millions of dollars a year, he said. Moynihan said he was following a blueprint for asset sales he gave to directors in 2009, as Bank of America directors were interviewing candidates to succeed Lewis, who resigned at the end of that year.
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Source

Well, that's the free market for you, as you Republicans would agree. As long as Obama doesn't right a fat check out to BOA, how will he be blamed for his one?

jcarlilesiu · Sep 12, 2011

Good.

That is the free market.

They should have failed the first time around.

BofA nose diving opens the door for smaller more efficient and better run outfits to grow their market share.

This is how its SUPPOSED to work.

Beevee · Sep 12, 2011

As I have repeatedly claimed, if you want the truth, don't use the BBC as your source.

http://www.bbc.co.uk/news/business-14586192

I'm gratified to see you didn't.

With regard to the OP article, I wonder how much Bank of America has actually cost the US taxpayer over the last 10 years. And how this action contributes to Republican claims that business drives the economy.

Talon · Sep 12, 2011

BringDownMugabe said: ↑

Source

Well, that's the free market for you, as you Republicans would agree. As long as Obama doesn't right a fat check out to BOA, how will he be blamed for his one?
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Why would Obama write out a check to save the jobs of a bunch of non-union bank workers? This ain't UAW/SEIU/AFL-CIO country where there are Democratic votes to be had...

Professor Peabody · Sep 12, 2011

BringDownMugabe said: ↑

Source

Well, that's the free market for you, as you Republicans would agree. As long as Obama doesn't right a fat check out to BOA, how will he be blamed for his one?
Click to expand...

Sorry, the stimulus really negated any free market you may speak of. It's Obama and the Democrats economy as they directed where they spent the stimulus money was spent. That's NOT a free market by any stretch of the imagination. It's a liberal agenda driven market running off a cliff.

TheLastBoyScout · Sep 12, 2011

The free market is speaking.

What it's saying is that American workers are too expensive.

...it's been saying this for a while by the way..........

sec · Sep 12, 2011

TheLastBoyScout said: ↑

The free market is speaking.

What it's saying is that American workers are too expensive.

...it's been saying this for a while by the way..........
Click to expand...

umm

no

I believe it's that based upon the workload they only need xxx employees and presently are overstaffed

it's called the Dreaded Private Sector

jcarlilesiu · Sep 12, 2011

sec said: ↑

it's called the Dreaded Private Sector
Click to expand...

Why is it dreaded?

GiveUsLibertyin2012 · Sep 12, 2011

Isnt this what you Libs wanted?The collapse of the big evil banks?And now that its possible,you flip flop on it?
We already bailed out BOA,if it goes under,let it go under.This was the result of the DEMOCRATIC Fwank-Dudd experiment of encouraging these banks lend out money to people(poor people) that took out mortgages they couldnt afford in the first place.(risky lending)This is what happens when you let the Government stick their noses into the market.
And now you want them to run our health care system?Hell no.If the Government ran a lemonade stand,they would probably do nothing but give it away ,and give the lemon bill to the tax payers.

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Bank of America to Lay-Off 30,000 Workers

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Bank of America to Lay-Off 30,000 Workers

BringDownMugabe Well-Known Member

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