BofA (BAC) May Cut 40,000 Jobs

September 9, 2011 8:32 AM EDT
The Board of Directors at Bank of America (NYSE: BAC) has begun talks on how many members of their work force may need to be laid off. The WSJ notes that it may be as high as 40,000.

The cuts will most likely take place in the bank's consumer related businesses segment, which makes up around 160,000 total positions.

The job cuts will be part of Chief Executive Officer Brian Moynihan's plan to reduce quarterly expenses at the company by $1.5 billion. The new cost cutting plan goes inline with the company’s "Project New BAC" initiative.

Bank officials were originally talking about cutting roughly 50,000 jobs, but decided that 40,000 would be more practical and manageable. The job cuts are an effort to prove to investors and the market that it’s still the bank that it has always been.

Mr. Moynihan has let go of two top ranking lieutenants this week and has promoted two others to the Co-Chief Operating Officer position. BAC believes that it will be able to run just as efficient with a slimmer work force, major competitors such as J.P. Morgan Chase (NYSE: JPM) currently perform with fewer employees.

This will be the first phase of the company's plan with the second one coming in October and pertaining to the banks commercial segment. This segment contains the company’s investment banking, trading, wealth management, and corporate banking sectors.

The company recently sold $5 billion in preferred shares to Warren Buffett's Berkshire Hathawy Inc. (NYSE: BRK-A) and sold a large chunk of its China Construction Bank shares. The company is also cutting 63 of its branches in the second quarter as they were unprofitable. Bank of America also plans on closing another 750 branches over the coming years.

If BAC does go through with the suspected 40,000 job cuts, it will be the largest reduction in the company’s history, topping the 30,000 to 35,000 plan announced back in 2008.

Bank of America is not alone as many banks are currently facing the scrutiny of cutting costs and improving their balance sheets. HSBC Holdings announced plans to cut roughly 30,000 jobs around the world by the beginning of 2014.

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