Bank of America plans to cut 30,000 jobs as it re-focuses its business on international and corporate lending, it said in a company statement.
There’s been word that the jobs will be cut in the U.S., but there is not confirmation of that today. The announcement simply refers to “layoffs,” with no mention of whether it’s globally or not.
However Moynihan said that layoffs would affect those areas under review in Phase 1 of Project New BAC.
That means these units are getting chopped: the consumer and small business banking, credit card, home loans, global tech and operations, and support areas.
The layoff plans were anticipated last week, as people familiar with BofA said it would cut from 30,000 to over 40,000 employees.
It sounds like a lot and it is, but here’s a bit of context. CEO Brian Moynihan said at the Barclays conference this morning that BofA acquired 200,000 people through 6 deals in the past 5 years.
Bank of America’s Project New BAC is key to the company’s strategy of focusing all of its resources on serving individuals, companies, and institutional investors.
The first result of New BAC was the recently announced management reorganization, removing a layer of management and streamlining the company by aligning its businesses with the customer groups.
This reorganization follows on work that started in January 2010. 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.
Bank of America is nearing the end of the first phase of a comprehensive review of its consumer businesses and support functions. As the company implements the thousands of decisions from Project New BAC over time, it intends to become a more focused, leaner, and more efficient company, providing all of its customers and clients with the best financial services, generating strong revenues, carefully managing expenses and risks, and delivering long-term value for shareholders.
Bank of America’s goal is not a given number of job reductions, but rather implementation of New BAC decisions. As the decisions are implemented, employment levels in the areas under review during Phase I are expected to be reduced by approximately 30,000 jobs over the next few years. The company expects that attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs.
Full implementation of approved ideas in Phase I is expected to lead to net expense reductions of $5 billion per year by 2014, on a baseline of $27 billion in annual expenses for the areas the company reviewed.
New BAC Phase II is scheduled to begin in October and continue through March 2012, and cover those businesses and operations that were not reviewed in Phase I.
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