[credit provider=”Flickr: Todd Dwyer” url=”http://www.flickr.com/photos/ret0dd/5396182151/”]
2012 is not coming in gently on Bank of America.Just today, we’ve seen three things that indicate that problems are, or will be, afoot. First, there are the layoffs in Bank of America’s Asia branches, second the Observer reports that the bank is experiencing some real estate shifts, and last (and perhaps most important) there’s the UniCredit rights offering. It’s just not going well.
Lets start with the news everyone expected. Reuters (via NYT) reports that Bank of America is cutting a fifth of their (expensive) managing directors in Asia. All of these cuts are in investment banking, which shouldn’t surprise anyone, but the fact that they’re in Asia speaks volumes for BofA’s outlook on the region.
These layoffs are forcing the bank to restructure its work force. With managing directors gone, it looks like younger workers are going to get the opportunity to flex their muscles:
…BofA is putting some of its analysts and associates – typically the youngest and newest members of a bank – into a general pool rather than assign them to a specific team, the sources said. This would allow the bank to set these younger bankers to any urgent and fee-producing work for any part of the business, rather than have them wait for their unit to see better demand.
Layoffs aren’t the only way BofA is downsizing, according to the New York Observer. The paper found out that the bank will not be renewing a hefty portion of its lease in one of its ancillary locations, the one on 114 West 47th Street. Previously, it leased around 660,000 sq ft of space, now it looks to be more like 360,000 sq ft.
To us, this is a sign of oncoming New York layoffs. If you have fewer employees, it follows that you need less space.
To be fair, BofA probably saw the Asia layoffs coming, and it probably planned to reduce its office space too. The last of today’s worries, though, is a legitimate gamble. BofA is one of two main underwriters of Italian bank UniCredit’s rights offering. It stands to lose $960.15 million if investors are not interested in buying more UniCredit stock at a discounted price by January 27th.
And according to the Financial Times, investors have not been that interested. First, because Italy is not the place where anyone wants to be right now. Second, because UniCredit shares (except for today) have been plummeting so hard that the discounted price ($2.48) at which investors could buy the rights is hardly attractive.
Today the stock is closed at $2.42.
Got more BofA worries? E-mail me @ [email protected] or call 646-376-6015