BankAmerica Asks Managers to Trim Expenses 10% in 2nd Half
BankAmerica Corp., which earlier this week reported a staggering second-quarter loss of $640 million, has asked its managers to cut office expenses by 10% during the second half of 1986.
The reduction, which could save the troubled banking concern about $60 million, involves such spending categories as travel, advertising, supplies and other corporate overhead. It doesn’t include personnel expenditures that, as previously reported, will also be cut as BankAmerica eliminates between 3,900 and 4,000 positions during the second half of the year.
BankAmerica currently employs about 76,750 people, having shed 1,200 employees this year, 5,500 last year and 2,500 in 1984. The reductions have been achieved through a combination of layoffs, attrition and the sale of subsidiaries.
Although no targets have been set, further substantial reductions are expected next year, a spokesman said. “Going forward, our mode is to reduce staff.”
BankAmerica’s total expenses, other than interest, were up 2% through the first half of the year to $2.18 billion from $2.14 billion a year earlier.
But Samuel H. Armacost, president and chief executive, said earlier this week that the staff reductions, a hiring freeze and expense controls “will allow us to meet our goal of reducing total corporate expense for 1986 to below the level for 1985.”
The San Francisco Examiner reported Friday that up to 7,500 more jobs could be eliminated next year. But bank officials said the estimate was premature and based on a misinterpretation of an internal bank memo.
The prospect of further layoffs, coupled with news that the bank had suffered the second-largest quarterly loss in U.S. banking history, has dampened morale at BankAmerica and its main unit, Bank of America.
“It is very difficult to manage under these circumstances,” said one first-line manager who asked to remain anonymous. “People are constantly looking over their shoulders.”
The huge second-quarter loss followed a modest profit during the first quarter and management assurances that prospects for continued improvement were good. The loss shrunk common stockholders’ equity to $3.26 billion, or 2.78% of assets--about half the percentage of most other large banks.
