BofA expects to cut 35,000 jobs
Bank of America Corp. said Thursday that it expected to cut 30,000 to 35,000 jobs over the next three years as it faces a deteriorating economic environment and tries to absorb Merrill Lynch & Co.
The final number could be even higher, analysts say. Charlotte, N.C.-based Bank of America said that it wouldn’t be finished with its analysis for eliminating positions until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.
Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come.
Thursday’s announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the last few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the last year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.
With no end to the economy’s troubles in sight, Bank of America might have to slash even more jobs as loan losses mount, said Alois Pirker, a senior analyst at Boston-based research firm Aite Group. If the company’s earnings worsen from this year to next, “I think that might lead to more reductions.”
Other big banks -- which have all received loans from the government’s bailout fund -- have been cutting jobs as well.
New York-based Citigroup Inc. has been slashing jobs the most. By next year, it expects to have shrunk its workforce by 75,000, or 20%, since its head count peaked in late 2007.
JPMorgan Chase & Co. is shedding about 7,000 employees, or 10%, of its investment bank staff, and cutting 9,200 jobs at Washington Mutual Inc., the bank it acquired in September. Goldman Sachs Group Inc. and Morgan Stanley, meanwhile, are reducing their staffs by about 10%.
The massive layoffs have raised questions about executive pay: With so many people losing their jobs, should the companies’ executives still receive lucrative packages? Chief executives at Citigroup, JPMorgan Chase and Bank of America have yet to reveal whether they will receive bonuses this year, but those at Merrill, Morgan Stanley and Goldman have announced that they will forgo them.
Some argue, though, that the shotgun deal between Bank of America and Merrill, valued at $50 billion when it was initially announced in September, may have saved jobs in the end. It was struck as the solvency of investment banks was in grave doubt and kept Merrill from a complete meltdown like the one suffered by Lehman Bros. Holdings Inc., which was forced to file for bankruptcy. Shareholders of both companies voted to approve the deal last week, and it is expected to close by Jan. 1.
Bank of America shares fell $1.78, or 10.7%, to$14.91, while Merrill shares fell $1.43, or 10.1%, to $12.67.
In after-hours trading, Bank of America rose to $15.03, and Merrill edged up to $12.68.
