BankAmerica to Cut Another 5,000 Jobs in ’87
BankAmerica will cut 5,000 jobs next year as part of an effort to reduce operating expenses by $450 million a year, a top company official said Monday.
BankAmerica President Thomas A. Cooper told reporters at a London press conference that the reductions will be in addition to planned cuts of about 5,000 jobs this year. The corporation has about 75,000 employees.
The bank also expects to cut its loan losses in half, from the current level of 2% of assets to 1% of assets by the end of next year. BankAmerica’s losses from bad loans have been running at a rate of nearly $1.5 billion a year since the beginning of 1985.
Cooper did not specify how the bank would reduce its loan losses, but company officials have said recently that they believe they now have a realistic picture of the bank’s loan portfolio problems and have set aside sufficient bad-loan reserves to cover expected losses.
Cooper also said the company by next spring would shed as much as $8 billion in assets, most of them overseas, as the troubled banking company struggles to regain profitability and shore up its capital base.
Selling European Units
He said the asset sales, which include subsidiary banks in Italy, Spain and West Germany and Bank of America branches around the world, would increase the company’s underlying capital by between $750 million and $1 billion.
BankAmerica’s moves are partly long-term strategy and partly defensive actions against an unwelcome takeover attempt by Los Angeles’ First Interstate Bancorp. BankAmerica is trying to strengthen its balance sheet and capital position to help fend off First Interstate, which last month offered securities that it says are worth $3.4 billion for the San Francisco banking giant.
BankAmerica hopes to complete the sale of its Italian subsidiary, Banca d’America e d’Italia, with its nearly $4 billion in assets, by the end of the first quarter of 1987. Cooper delined to say how much the bank is asking for the profitable unit, but analysts say it could bring $700 million, giving BankAmerica an after-tax gain of $300 million.
“This is a unique time to be selling a property there,” Cooper said, adding that financial deregulation in Italy would increase banking competition there.
He said the company’s exit from the retail banking business in Europe and elsewhere is part of its overseas strategy of focusing on banking services for major corporate customers only.
