BofA targets highly paid investment bankers in latest layoffs
Bank of America, which has been working to downsize its consumer operations by 30,000 employees, now is targeting highly compensated investment bankers and non-U.S. wealth managers -- efforts expected to reduce the job rolls at the bank by 2,000 people.
The cuts, first reported in the Wall Street Journal on Tuesday, also will cost some commercial bankers their jobs at BofA, the second-largest U.S. bank as measured by assets.
The actions include the planned sale of a division handling wealth management in Europe, Latin America and Asia, according to a person briefed on the plans who was not authorized to speak publicly about the matter and requested anonymity.
The moves had been expected as BofA Chief Executive Brian Moynihan tries to fashion a smaller but more focused and profitable company. It’s part of a general trend on Wall Street of paring back on investment bankers because the global economic uncertainty has caused a steep decline in deal-making.
Moynihan is trying to slash costs to withstand the fallout from BofA’s disastrous 2008 takeover of Calabasas, Calif.-based mortgage giant Countrywide Financial Corp., and to compensate for reduced fees and lending income in the current environment of an uncertain economy, record low interest rates and tougher bank regulation.
Many of the latest layoffs will come from among employees of Merrill Lynch & Co., another huge acquisition by Moynihan predecessor Ken Lewis which, unlike Countrywide, has proved profitable for the bank.
In addition to selling Merrill’s non-U.S. wealth-management arm, the company plans to cut the jobs of up to 400 high-earning investment bankers, many of them former Merrill employees based in New York and overseas.
Word of massive layoffs in the consumer realm broke last September, as Moynihan launched a major restructuring he called New BAC. At the time, the bank said a second round of New BAC would involve other parts of the company, such as trading, commercial and investment banking.
The current investment bank layoffs are largely unrelated to New BAC, bank officials said, and analysts expect additional job cuts when details of the broader strategy become clear.
“It needed to be done earlier,” analyst Paul J. Miller of Friedman of Billings Ramsey & Co. said Tuesday. “There should be more [layoffs] behind it.”
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