Report: 30,000 jobs cuts possible at struggling Bank of America
Above: Bank America Corp. shares have dropped dramatically over the past six months.
Wake up and good morning. Bank of America executives are considering jobs cuts that could reach 30,000 workers or more than 10 percent of the country's biggest bank. So says Charlotte Observer banking reporter Rick Rothacker, who's covered the bank closely in its hometown of Charlotte for years. The story cites anonymous sources, not surprisingly, since even Bank of America would be hard pressed to issue a sunny press release over draconian cutbacks of personnel.
The Observer story quotes Dick Bove, a Lutz, Fla.-based banking analyst (photo, right) for Rochdale Securities who follows Bank of America. Says Bove: "It's certainly going to be in the tens of thousands, and it's going to be at that level in other large banking institutions." (Photo courtesy of Rochedale Securiities.)
If 30,000 do get cut, a process that could take years, it may not be so shocking as it seems. The bank is a wreck and even CEO Brian Moynihan has been selling off assets to raise capital -- even though he says raising capital is not necessary (figure that one out). While the bank even got a $5 billion investment from Warren Buffett recently, cynics point out the deal benefits Buffett ahead of most other BofA investors.
In April, senior BofA managers started Project New BAC (as in Bank America Corp.) aimed at reducing costs and streamlining the bank. Those efforts can't come fast enough, if the company's stock price -- opening Tuesday morning at a paltry $7.25 per share -- is any indicator of investor faith in the bank's future.
Moynihan has indicated the project would come to fruition as "we go past Labor Day" ... well, here we are.... and that savings from the program will be "both material and substantial based on our work to date." The bank will provide more details about the program during its third-quarter earnings call in October, he said.
We'll see what comes of this. I wrote a recent column, chronicling BofA's litany of customer blunders and poor decision making, raising the question whether BofA is "TBTF" -- Too Big To Function. If the bank's going to cut 30,000 jobs, maybe it agrees.
-- Robert Trigaux, Business Columnist, St. Petersburg Times