BofA Chief’s Roadshow Is Tough Going
Hugh McColl’s four-day tour of California got off to a rocky start this week when the BankAmerica Corp. chairman revealed that the bank expects to cut 18,000 jobs worldwide, more than twice the 5,000 to 8,000 job losses initially predicted in its merger last year with Charlotte, N.C.-based NationsBank Corp.
McColl’s state tour was intended to highlight the bank’s charitable giving and to mollify public officials and others who had questioned the merged bank’s commitment to California lending. But word of the expected job cuts, on top of recent executive defections and concerns about minority lending, swamped BofA’s announcement of a $5-million gift to UC San Francisco, and led to fresh criticism from community activists.
McColl, who visited San Francisco Monday and Tuesday, continues his tour today with a Town Hall Los Angeles speech at the Biltmore Hotel in downtown Los Angeles.
BofA executives said Tuesday that the job cuts will come mostly through attrition over the next three to five years. Analysts said the job losses, which will total about 10% of the bank’s global work force, weren’t entirely unexpected.
“With more banking being done through ATMs, over the phone and on the Internet, that by its nature requires less of a physical presence,” said Joe Morford, a banking analyst with Van Kasper & Co. in San Francisco.
But the announcement heightened critics’ fears that BofA has been downplaying the merger’s real cost and its effects on California.
“California is going to get the short end unless our local and state leaders are vigilant and aggressive in getting their fair share,” said Bob Gnaizda, head of San Francisco-based Greenlining Institute, which monitors and advocates for minority lending.
On Tuesday, seven minority business associations, including the National Black Chamber of Commerce, the California Hispanic Chamber of Commerce and the Council of Asian American Business Assn. published an open letter to Federal Reserve Chairman Alan Greenspan in the New York Times, demanding he scrutinize and enforce BofA’s $350-billion community reinvestment pledge.
Last month, members of Congress and community groups asked Greenspan to hold new hearings on the merger to discuss their concerns after seven of the bank’s top 10 women executives and 11 of its top 13 executives had resigned. The resignations included that of former BofA Chief Executive David Coulter, who became the bank’s president after the merger and who had been expected to take over after McColl’s retirement.
The bank insists that more than 80% of the pre-merger BofA executives who were eligible for buyout packages have decided to stay with the new bank. Of those staying, 27% were women. Women also made up 27% of the executives who left the bank.
BofA critics want McColl to set specific minority-lending goals for California, and to make public quarterly reports by state and region that compare its minority lending in North Carolina, where the bank is now headquartered, with similar lending in California.
McColl on Tuesday agreed to the latter request, but has refused to sign pledges detailing minority lending goals in California.
