Reports Of New BofA Layoffs Misleading
Headlines Thursday were full of news that Bank of America will cut 16,000 jobs by the end of the year. But the headlines can be misleading.
These layoff reports give the impression that every few months there's another major bloodletting at Bank of America. In fact, this latest 16,000 number - and others we've heard in recent months - are all part of the same job cuts announcement Bank of America made last September - 30,000 jobs it said it would cut.
At that time, Bank of America CEO Brian Moynihan described a plan to get the bloated bank back to its fighting weight.
"The whole goal here was to make our company more streamlined, more efficient, easier to do business with, both internally and externally," said Moynihan at an investors conference.
The effort - called "Project New BAC" after the company's stock symbol - aims to shave $5 billion from the bank's annual expenses by 2014. Trimming headcount by 30,000 is part that.
But an internal document obtained by the Wall Street Journal shows the bank working to hit that 30,000 job cut target by the end of 2012 - a year early. Bank of America has not confirmed the details of that memo.
SNL Financial Contributing Editor Nancy Bush isn't surprised, considering the latest Federal Reserve move to keep interest rates very low for another year. Low rates mean less profit for banks.
"I think the banking industry as a whole is reading this - you know the headwinds on interest rates are going to be there for even longer than they had initially anticipated and they got to get ready for it," says Bush.
Bank of America has spent the last several years digging itself out from under the mountain of bad loans it acquired with Countrywide Financial. The company's stock is still trading for less than $10 a share and investors remain skeptical that cutting costs will be enough to get the bank back on solid ground.
The belt-tightening has already toppled BofA from the title of biggest bank in the land. If it hits the 30,000 job cut target by the end of this year it may no longer be the nation's biggest banking employer either.
It'll still be a major employer in Charlotte though with a local headcount holding steady at about 15,000 workers.