AP
Bank of America to Eliminate 3,000 Jobs
Wednesday October 24, 7:22 pm ET
By Ieva M. Augstums, AP Business Writer
Bank of America Announces Plans to Cut 3,000 Jobs, 1 Week After Reporting Poor 3Q Results


CHARLOTTE, N.C. (AP) -- Bank of America Corp. said Wednesday it will eliminate 3,000 jobs, an announcement that came less than a week after the nation's second-largest bank reported a huge drop in earnings for the third quarter.

The cuts will affect less than 2 percent of the company's staff. Most of them will be from Bank of America's investment banking unit, the company said.

The Charlotte-based bank also said Wednesday that it is launching a strategic review of its investment banking business.

Gene Taylor, head of Global Corporate and Investment Banking, will retire at the end of this year and be replaced by Brian Moynihan, who ran the company's Global Wealth and Investment Management business.

"While some of these changes are a direct result of our underperformance, others have been contemplated for a number of months as we looked at how we could operate more effectively," Bank of America Chief Executive Kenneth D. Lewis said in a statement. "We must have a platform that operates profitably for both our company and our clients."

Bank of America said last Thursday that its profit fell 32 percent in the third quarter as trading losses and write-downs on a wide variety of loans offset solid revenue growth in most businesses.

Net income declined to $3.7 billion, or 82 cents per share, from $5.42 billion, or $1.18 per share, a year ago, and revenue fell 12 percent to $16.3 billion.

The dismal performance was a major setback for Lewis and his goal to build a major investment banking presence on Wall Street.

"I've had all of the fun I can stand in investment banking at the moment," Lewis said last week after the third-quarter results were announced. "So to get bigger in it is not something I really want to do."

The job cuts, which the company said come "in light of market conditions and strategic imperatives," are throughout the bank, but the majority are investment banking-related in areas such as business lending, treasury services, and capital markets and advisory services, as well as support staff. Investment banking is largely based in New York but has a Charlotte presence.

Last week, Chris Hentemann, head of Bank of America's global structured products unit, left the company.

Hentemann had been in charge of products such as mortgage-backed and asset-backed securities and related trading. Such investments -- especially subprime mortgages made to borrowers with weak credit -- plummeted in value this summer as rising defaults and foreclosures discouraged investors and led global credit markets to seize up.

The layoffs at Bank of America are among the largest at the bank under Lewis, who took the helm in 2001. The bank cut 12,500 positions after it acquired FleetBoston Financial in 2004, and an additional 4,500 in a follow-on restructuring. Upon his purchase of credit card issuer MBNA Corp. last year, Lewis cut about 6,000 jobs. The bank plans to eliminate 4,000 jobs in this year's purchase of LaSalle Bank Corp.

Bank of America announced Wednesday's cuts after stock markets closed. The bank's shares fell 26 cents in extended trading after falling 30 cents to end the regular session at $47.48.

Most major banks reported a tough third quarter.

Charlotte-based Wachovia Corp., which saw its third-quarter profit fall 10 percent due to unrest in the nation's credit markets, said Friday it planned to eliminate about 200 jobs within its investment bank by year end.

Shares of Wachovia hit a new 52-week low Wednesday after a Banc of America Securities analyst downgraded the stock, citing challenges for the investment bank and the potential for above-average credit burden going forward.

Wachovia shares traded as low as $44.22, before closing at $45.40, a 57 cent loss, with heavier-than-usual trading.

At Citigroup Inc., the nation's largest bank, third-quarter profit fell 57 percent to $2.38 billion. New York-based Citigroup announced before reporting its earnings that it was combining its investment banking and alternative investments units into one business. Several executives left the bank.

The newly combined unit will be led by former Morgan Stanley executive Vikram Pandit, who has been running Citigroup's alternative investments unit for several months.