2012-09-21 09:51:20
Reuters
(Reuters) - Bank of America Corp is speeding up planned job cuts as revenue
continues to decline amid new regulations and a tepid economy, the Wall Street
Journal reported.
The second-largest U.S. bank intends to slash 16,000 jobs by year-end, putting
it a year ahead of a plan to eliminate 30,000 under a cost-cutting program
called Project New BAC, the newspaper said, citing a document given to top
management.
The bank began cutting jobs last fall and had been expected to complete the
task by the end of 2013.
Bank of America has lagged rivals in recovering from the financial crisis,
largely due to mortgage-related losses. Total revenue has declined for four
straight quarters, raising investor concerns about how it will boost earnings.
"Given the uncertainty in the economy, expense savings and efficiencies are the
primary catalyst that they have for earnings growth over the next year,"
Guggenheim Partners analyst Marty Mosby said.
Other banks are also turning to cost-cutting as a way to improve profits, Mosby
said.
A person familiar with the planning for New BAC told Reuters the reported
acceleration of the cost-cutting was surprising because the plan was on track
and had been well-received by Wall Street.
One challenge in cutting jobs more rapidly will be implementing new systems
fast enough as more work is automated, the person said.
Since taking the helm in 2010, Chief Executive Brian Moynihan has been working
to streamline and reduce risk at Bank of America by selling off assets and
business units not considered essential. The bank has lost its perch as the
largest U.S. bank by assets and could fall below JPMorgan Chase & Co and Wells
Fargo & Co in total employees.
The bank had 275,460 employees at the end of the second quarter, down about 3
percent since Moynihan became CEO.
Bank of America spokesman Larry Di Rita declined to comment on the bank's
cost-cutting plans.
Under Project New BAC, Bank of America has said it planned to eliminate $5
billion in annual expenses and 30,000 jobs by the end of 2013, largely through
cuts in consumer and technology areas. A second phase is expected to eliminate
$3 billion in annual expenses by mid-2015 by making undisclosed cuts in capital
markets, commercial banking and wealth management areas.
In the second quarter, cost savings from the first phase were running at an
annual pace of $970 million, behind a goal of $1 billion, the Journal said,
citing the document.
Bank of America shares were down 0.75 percent at $9.22 in afternoon trading.
Separately, Bank of America has named Anne Walker head of global corporate
strategy and investor relations, replacing Thong Nguyen, who has moved into a
consumer banking position after less than a year in the role.
Walker, who joined the company in the 2009 Merrill Lynch acquisition, will
report to Chief Financial Officer Bruce Thompson, people familiar with the
matter said. Investor relations director Kevin Stitt, who previously reported
to Thompson, will now be under Walker.
Nguyen, who has worked with Moynihan at Bank of America and at FleetBoston
Financial, is now head of retail, strategy, sales and operations, reporting to
Katy Knox, head of retail banking and distribution. The bank's consumer unit,
which has lost revenue due to new regulations, has been closing branches to cut
costs.
(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by
Muralikumar Anantharaman and Dale Hudson)