Bank of America may cut as many as 40,000 jobs during the first wave of a restructuring that CEO Brian Moynihan is expected to discuss Monday, people familiar with the plans told the Wall Street Journal.
The newspaper reported Friday that the numbers aren’t final and could change. The cuts would occur over several years.
Moynihan is battling to get the nation’s largest bank back on track after tens of billions in mortgage-related losses and a sagging stock price. He’s told investors that he plans to cut $6 billion a year from operating expenses.
The bank, which has a workforce of 288,000, has already said it plans to cut 6,000 jobs by the end of the year. Most of the cuts being discussed would come from the consumer side of the operation, the Journal reported.
The bank said late Tuesday that it would now be run under the leadership of two chief operating officers, David Darnell and Tom Montag. The bank also said that Sallie Krawcheck, head of global wealth and investment management, and Joe Price, president of the consumer bank, are leaving, the Associated Press reported.
Moynihan is coping with an unknown quantity of toxic mortgage loans, much of it from the firm’s acquisition of Countrywide. Three weeks ago Warren Buffett said he would funnel $5 billion into the bank.
It’s been a rough summer for Moynihan. He gave what at times was a ringing defense of himself and BofA’s top management at a meeting with investors and analysts in August.
Asked why insiders weren’t buying more of the stock, he shot back, “My entire net worth is in this company, investors should rest assured. All of us in top management are paid in stock. We believe in it, and you’ll see us buy it.” Asked when BofA might again start paying a dividend, he demurred, saying he would have “no success” in trying to predict that.
Moynihan was asked if it would be possible for the bank in future to average a 1 percent return on assets and 10 percent return on equity. “In other words,” he said, rephrasing the question, “can we earn enough to have this business make sense?” He thought the targets were achievable in a normal business cycle. “If you don’t achieve that, you’re not going to get investors to invest in this industry.”
As for BofA’s exposure to Europe’s sovereign debt credit crisis, he dismissed it. “There’s nothing there,” he said, “that’s a capital question for us.” The bank, he said, had started reducing its exposure 18 months ago. Within Europe, he said, BofA has an exposure of $16.7 billion, and that $1.6 billion of that was to sovereign entities. And, $1.5 billion of that he said was protected by credit default swaps, in effect an insurance policy against losses.
With reporting by ABC News’ Alan Farnham.