Bank of America cutting 3,500 jobs this quarter: Memo
Bank of America is cutting 3,500 jobs this quarter according to an internal memo, as the biggest US bank grapples with its USD 1 trillion problem-loan portfolio and growing economic concerns.
Singapore: Bank of America is cutting 3,500 jobs this quarter according to an internal memo, as the biggest US bank grapples with its USD 1 trillion problem-loan portfolio and growing economic concerns.
The job cuts at Bank of America, expected to be completed by the end of September, are the latest in a series of lay-offs across the global finance industry.
"The third quarter reductions in force are not part of the New BAC Project, through which employees and managers are working to transform policies, practices and organizations to better align to the company's customer-driven strategy," an internal communications seen by our sources.
Bank of America was not immediately available for comment outside regular US business hours.
Executives at the bank are still discussing the possible range of cuts, but one person familiar with the situation said at least 10,000 jobs are likely to be eliminated as part of a wider review, the Wall Street Journal said in a report.
Bank of America had around 280,000 employees at the start of 2011, according to its annual report.
Investors believe Bank of America may also need to raise money by offering new shares to help absorb billions in legal and credit costs stemming from its 2008 purchase of Countrywide Financial Corp.
Eager to shed assets and rebuild its battered capital base, Bank of America said on Monday it plans to sell its $8.6 billion Canadian credit card portfolio to TD Bank Group.
The bank also wants to exit its United Kingdom and Ireland card businesses, but has yet to decide whether to sell or wind down those operations, its spokesman Jerry Dubrowski said.
This was followed by an announcement Thursday, naming an executive from its Merrill Lynch investment banking unit to oversee its bad mortgages.
Bank of America has lost more than USD 22 billion in its consumer mortgage division in the last four quarters.
It agreed in June to pay USD 8.5 billion to mortgage securities investors and is fighting numerous lawsuits challenging the settlement and other mortgage issues.
Analysts say Bank of America is likely to continue selling similar pieces of its loan portfolio, which have had a small impact on its bottom line, but may still be attractive to outside bidders.
Renewed fears the euro-zone debt crisis could infect the financial system and stress short-term funding pose another challenge for the bank, which posted its worst-ever quarterly loss of USD 8.8 billion in July on persistent mortgage problems.
Banks came under pressure after European firms were hit hard on worries about short-term funding as money markets, the arteries of the financial system, show increased stress.
Option traders on Thursday zeroed in on Citigroup and Bank of America as bank stocks were roiled in Wall Street's selloff.
In BofA, more than 71,000 November USD 4 puts changed hands, giving holders the right to sell the stock at a little more than half its Thursday closing price of USD 7.01.
Shares in the bank have already more than halved from a peak above USD 15 in January.
Sensitive to the ups and downs of the global economic cycle, global banks have announced close to 50,000 job cuts, starting now and continuing in coming years.
HSBC and Lloyds Banking Group have announced the biggest cuts.
Bank of New York Mellon Corp last week said it plans to cut about 1,500 jobs, or 3 percent of its workforce, to stem rising expenses.