Bank of America Corporation (BAC), the third-largest U.S. bank, said it is working on a plan to eliminate 30,000 to 35,000 positions over the next three years reflecting the pending merger with Merrill Lynch (MER) and the persistent weak economic environment.
The job cuts, which according to the bank will not be determined until early 2009, will be nationwide and will affect primarily those areas where the companies have significant overlap, such as staff support. Bank of America expects cuts to be made in all parts of the business and as many as possible will be generated by attrition. Severance and other benefits will be provided for those associates whose jobs are eliminated and who cannot be offered another position, North Carolina-based bank said in a statement today. BofA also noted that the reductions are designed to eliminate redundancies created as a result of the merger with Merrill and to reflect the current recessionary environment.
The companies have a combined workforce of around 307,000 people, including approx. 60,000 at New York-based Merrill Lynch. Today’s announcement represents a workforce reduction of around 11%.
Bank of America continues to do business with all of its client segments and actively originates loans through all of its credit product lines. But, despite its healthier state than many of its rivals, the firm still had to tap the TARP program, set up by the US Treasury Dept. to recapitalise banks’ bleeding balance sheets. The bank has so far received $15 bln from the $700 bln Troubled Asset Relief Program and a further $10 bln from investors.
BofA is the latest firm to announce a workforce reduction. Citigroup Inc. (C) is planning to eliminate 52,000 jobs in fiscal ’09.
BAC fell 11% to $14.91 today in NYSE trading, and has dropped nearly 65% this year.
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