L.A. Replacing N.Y. as B of A Center for Currency Trading
Bank of America said Monday that it will close its foreign exchange trading operation in New York and shift the trading to Los Angeles.
Most of the 104 employees in B of A’s New York operation will be laid off by Dec. 1. The bank said some have been offered jobs in Los Angeles, but a company official said the number was “only a handful.”
The expansion of its Los Angeles office from 16 professionals to about 30 will make B of A the largest foreign currency trading operation in Los Angeles, the bank said. The expansion will occur over the next 18 months, and the bank will add more support workers.
Peter Magnani, a bank spokesman, said B of A will retain its smaller foreign exchange trading at its San Francisco headquarters.
The choice of Los Angeles over San Francisco to house the New York business reflects Southern California’s emergence as the West Coast center for international business. Security Pacific and First Interstate maintain active foreign exchange trading operations here, as do a number of foreign banks, principally the Japanese.
“Los Angeles is a much deeper marketplace than San Francisco, and it is very attractive to us,” said John R. Vella, the B of A executive vice president in charge of North American trading operations.
Vella said the move from New York will also allow the bank to take advantage of the position of Los Angeles in the international time zones.
“If we can operate a trading room (in Los Angeles) that opens between 5 and 6 a.m. and stays open into the early evening hours, we can capture the European afternoon, the full U.S. day and the Asian morning,” said Vella.
The move is also expected to improve B of A’s ability to serve the growing Pacific Rim trade.
In foreign exchange trading, banks around the world buy and sell currencies among themselves, usually as intermediaries on behalf of corporate customers. The trading is similar to trading on the commodities market. Banks collect fees on the transactions and also speculate in currency prices for their own accounts.
Corporations doing business in international markets often need to buy or sell large amounts of a foreign currency, and the growing presence of those corporations in the Los Angeles area is one reason for the expansion of foreign exchange trading here.
However, profit margins as intermediaries for large U.S. and multinational corporations have grown thin in recent years as a result of increased global competition in the trading. The dwindling profitability was another factor in the closing of B of A’s New York office, which concentrated on serving large corporate customers.
Vella said the bank hopes to retain as much of that corporate business as possible through its expanded Los Angeles operation, which is in the bank’s Southern California headquarters downtown in the Arco Plaza.
But he acknowledged that the smoothness of the transition and the ability to retain significant portions of the business will depend in part on persuading some key people to move to Los Angeles. He said he does not know how many will accept the relocation offer.
Of the 104 employees affected, most were fired Monday and most of the remaining employees will have until Dec. 1 to find new jobs. A much smaller group has been asked to remain with the bank and move to Los Angeles.
An executive in the trading operation of a competing bank in Los Angeles said it is difficult to market to the big East Coast corporations from California, despite the advantages of modern communications.
Closing the New York office also is part of B of A’s cost-cutting measures. The bank has eliminated thousands of jobs and trimmed other expenses in recent months in an effort to return to long-term profitability.
