Bank of America, the second largest U.S. bank, hopes to speed up cost-cutting efforts and aims to cut 16,000 jobs by year’s end, the latest move by the financial institution to trim expenses amid declining revenue.
The workforce reduction would bring Bank of America’s head count down to 260,000, a move that ends the company’s position as U.S. banking’s biggest employer, making it smaller than Citigroup, Wells Fargoand JPMorgan Chase. Plans to quicken the pace of the layoffs were detailed in a document given to top management, an outline obtained by The Wall Street Journal.
This latest decision comes less than two months after Bank of America said it would slash $3 billion annually from commercial lending, investment banking and wealth management in an effort to become a leaner organization and drive more revenue from customer. The bank first pledged to reduce expenses in 2011, when it announced a plan to save $5 billion annually and cut 30,000 jobs by the end of 2014, a move that would reduce its consumer banking and information technology businesses.
Becoming a smaller institution with a greater emphasis on the deal-making power behind itsMerrill Lynch unit makes sense. The bank is struggling and lagged the recovery seen by peers since the financial crisis. Its loan book shrank in second quarter, as interest income fell 15%. Meantime, the stock is down 72% since September 2008. For contrast, Wells Fargo gained 12% and JPMorgan rallied 4.4%.
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