BOA plans significant investment job cuts
(2 May 2012 – USA) Rumours are swirling that Bank of America Corporation (BOA) is planning to cull up-to 300 positions across its capital markets and investment banking businesses, as the group struggles to reduce costs in the face of weak revenue growth.
A source, speaking to Reuters, said that the bank, which is the second largest bank in the United States by assets, was also assigning junior bankers to work with broader groups of companies, a move which could lead to further lay-offs.
The bank’s planned job cuts in the investment and capital markets businesses are not likely to be as severe as cuts across the retail banking sector.
The planned "cost cutting" changes for junior bankers are part of a program called "Project New BAC" launched last year, the source said. The program is designed to improve profits as the sluggish economy weighs on revenue growth and new regulations increase costs.
The initial phase of the "Project New BAC" is expected to cut around US$5 billion in expenses from the bank’s balance sheet over the next few years, and will affect the consumer and technology sectors of the group.
The second wave of cost cutting measures, which hone in on investment banking, sales and trading, commercial banking and wealth management, are expected to be finalised in May.
Bank of America declined to comment on its plans for the second phase. In earnings conference calls, executives have said the second phase will produce fewer job cuts and lower savings than the first phase because it covers a smaller and more efficient area of the company.
The bank’s first quarter trading revenue and investment banking fees rebounded from a weak fourth quarter but were still down from a year ago.
'Clearly on the margin this quarter you feel better about the overall sales and trading opportunity, (but) it's not going to change the rigor and discipline with which we go through' the second phase of New BAC, Chief Financial Officer Bruce Thompson said during the bank's first-quarter earnings call.
The bank’s planned job cuts in the investment and capital markets businesses are not likely to be as severe as cuts across the retail banking sector.
The planned "cost cutting" changes for junior bankers are part of a program called "Project New BAC" launched last year, the source said. The program is designed to improve profits as the sluggish economy weighs on revenue growth and new regulations increase costs.
The initial phase of the "Project New BAC" is expected to cut around US$5 billion in expenses from the bank’s balance sheet over the next few years, and will affect the consumer and technology sectors of the group.
The second wave of cost cutting measures, which hone in on investment banking, sales and trading, commercial banking and wealth management, are expected to be finalised in May.
Bank of America declined to comment on its plans for the second phase. In earnings conference calls, executives have said the second phase will produce fewer job cuts and lower savings than the first phase because it covers a smaller and more efficient area of the company.
The bank’s first quarter trading revenue and investment banking fees rebounded from a weak fourth quarter but were still down from a year ago.
'Clearly on the margin this quarter you feel better about the overall sales and trading opportunity, (but) it's not going to change the rigor and discipline with which we go through' the second phase of New BAC, Chief Financial Officer Bruce Thompson said during the bank's first-quarter earnings call.
Subscribe