Bank of America Will Cut Jobs and Focus on Its Core Financial Services Businesses
Bank of America is nearing the end of the first phase of its massive Project New BAC reorganization that will remove a layer of management and reduce an estimated 30,000 jobs over the next few years, the company announced yesterday. The streamlining effort is designed to help the bank focus more on core services, strengthen revenue and deliver long-term value for shareholders.
Stock in the nation’s largest bank traded below $7 a share for much of the day yesterday, familiar territory for investors who followed Warren Buffet’s $5 billion example and bought Bank of America shares in August.
The banking behemoth’s update on its ongoing streamlining effort followed a company presentation yesterday at the Barclays Capital 2011 Global Financial Service Conference.
In a prepared statement released from its Charlotte, NC, headquarters, bank officials said, “The company continues to sell non-core business units and assets that don’t support its strategy, thereby strengthening the balance sheet, and improving capital and liquidity.”
The bank says it expects to achieve much of its job cuts through attrition and by eliminating certain unfilled jobs. Full implementation of Phase I of Project New BAC, launched in January 2010, is expected to save $5 billion per year by 2014. New BAC phase II is set to begin in October and continue through March 2012.
The reorganization will likely rid Bank of America of bragging rights to being the biggest U.S. bank in terms of assets. But zeal to be the biggest prompted the bank, under the stewardship of former CEO Kenneth D. Lewis, to acquire Countrywide Financial Corp. and other losing propositions, in an expansion that ultimately cost Lewis his job and necessitated a federal bailout.
Bank of America, with its 5,700 retail banking offices, 17,800 ATMs and 30 million active online users, is most likely to be named primary bank by investors surveyed by Millionaire Corner. In a December survey, 14 percent of non-Millionaire investors identified Bank of America as their main bank. Wells Fargo and JP Morgan Chase were the second most popular banks with each claiming 11 percent of non-Millionaire investors as their clients. Baby boomers show a special affinity for Bank of America with 18 percent identifying B of A as their bank.