BofA Says It Will Cut 12,500 Jobs
Bank of America Corp., the nation’s No. 2 bank, said Monday that it planned to cut 12,500 jobs over the next two years as a result of its $48-billion purchase of FleetBoston Financial Corp.
The cuts amount to about 7% of the combined banks’ workforce of more than 180,000. Bank of America said about 30% of the cuts would be through attrition.
“They feel like they have something to prove to Wall Street to convince investors like ourselves that they didn’t pay too much for Fleet,” said Larry Puglia, who runs the $7.6-billion T. Rowe Price Blue Chip Growth fund and owns Bank of America shares. “It is an unfortunate aspect of entering into large mergers like this that there will be some job losses.”
Kenneth Lewis, chief executive of the Charlotte, N.C.-based bank, has targeted $1.6 billion of cost savings from the merger, which was completed Thursday. The combined bank has about $938 billion in assets, 5,700 banking offices in 29 states and the District of Columbia and about 36 million customers.
Bank of America said that it would begin making cuts this month and that most of the cuts would affect support staff and areas in which Bank of America’s and Fleet’s businesses overlapped. It began notifying employees of the cuts Monday.
“When we discuss job reductions, we are talking about positions, not necessarily people,” new Chief Financial Officer Marc Oken said. “These are difficult decisions.”
Bank spokeswoman Eloise Hale said, “We are structuring the company to meet the best needs of our customers.”
Bank of America said it would strive to find jobs at the bank for affected personnel.
Some jobs in New England, where Fleet was the largest bank, will be lost in the short term, the bank said. But it will add jobs to the region and is committed to maintaining overall New England employment levels, Bank of America said.
Citigroup Inc. is the largest U.S. bank. Bank of America is expected to drop to No. 3 when J.P. Morgan Chase & Co. completes its purchase of Bank One Corp.
Bank of America shares rose 74 cents Monday to $81.25 on the New York Stock Exchange.
