NEW YORK — The 30,000 Bank of America employees set to lose their jobs face bleak prospects in a market that has contracted 9 percent for financial services workers in the past five years and as smaller lenders cut back.
Bank of America, the biggest U.S. bank, said Monday it plans to eliminate $5 billion in annual costs by the end of 2013 as chief executive officer Brian Moynihan implements a plan to restore profitability. The job cuts are expected to come "over the next few years," the Charlotte, N.C., bank said in a statement.
Employment in the financial services industry fell to 7.61 million workers in August from a peak of 8.35 million in December 2006, according to the Bureau of Labor Statistics. Regional lenders probably can't pick up many of the new round of castoffs, as smaller banks trim expenses to counter slowing revenue growth, said Kevin Fitzsimmons, an analyst for New York's Sandler O'Neill & Partners.
"It's a tough time," Fitzsimmons said. "Everyone is scrutinizing their expense base. If that trend is going on across the industry, I wouldn't jump to the conclusion that there's a home for all of these folks."
The first phase of Bank of America's overhaul, named Project New BAC after the company's stock ticker, focuses on consumer banking, credit cards, home loans and technology, Moynihan said. The effort will slash about 18 percent from the company's $27 billion in consumer-related expenses, he said.
The earliest cuts will target consumer banking and support staffs such as human resources, according to the bank.
A prolonged low interest rate environment and slow economic growth are squeezing margins while loan demand slows, forcing branch closings and job cuts at both the biggest banks and among regional lenders.
Regions Financial, based in Birmingham, Ala., plans to consolidate about 40 branches later this year to focus on "productivity and efficiency initiatives," CEO Grayson Hall said in July. Atlanta-based SunTrust Banks is targeting $300 million in expense cuts through 2013, partly by providing some services with "fewer people in the future," CEO William Rogers said on a conference call that month.
"There's probably not a long list banks you can think of to say, 'They're hiring,' " Fitzsimmons said. "It's very selective. Otherwise, some of those people might have some time to wait until things get better."
Citigroup CEO Vikram Pandit has slashed more than 100,000 workers since December 2007 through a combination of layoffs and sales of distressed investments. Pandit, 54, has sold more than $300 billion of troubled assets, including unwanted finance firms, auto loans and private-equity stakes.
Still, he plans to more than double the bank's staff in China to 12,000.
Bank of America's branch employees could provide hiring opportunities for profitable banks with adequate capital levels, Fitzsimmons said. BB&T Corp., based in Winston-Salem, N.C., may look at "selective" hiring opportunities following the layoffs, he said. The lender remained profitable throughout the financial crisis.