Bank of America Confirms 30,000 Layoffs
The bank is downsizing to cut $5 billion in costs.
Sept. 12, 2011 — -- Bank of America, trying to break free from a pile of bad mortgages and a sagging stock price, announced plans to lay off 30,000 employees over the next few years.
In a statement Monday, the bank said its goal is "not a given number of job reductions," but to focus "all of its resources on serving individuals, companies, and institutional investors."
The Charlotte, N.C.-based bank, the largest in the U.S. by deposits, said it will cut $5 billion in costs.
"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 bank stated. "The company expects that attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs."
Bank of America is now the employer with the largest U.S. layoff announcement this year, according to global outplacement firm Challenger Gray & Christmas. Pharmaceutical company Merck formerly held that title after announcing on July 29 plans to layoff 13,000 employees by the end of 2015.
Paul Miller, managing director, FBR Capital Markets & Co., said he and other analysts expected the announcement today about the layoffs, which were slightly more than expected.
"We knew they were shrinking the balance sheet and cutting costs," Miller said. "Today, there is just an exact plan."
The Wall Street Journal reported on the bank's layoff plans Friday.
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. The bank also said it plans to reorganize its management structure. Last week, the bank said it would now be run under the leadership of two chief operating officers, David Darnell and Tom Montag. It 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.
"The real issue for the stock trading where it is today is that we don't know about the bank's business model and mortgage litigation expenses," Miller said.
Miller said the stock price received a short-lived boost this morning when Bank of America CEO Brian Moynihan spoke during a conference call about its former acquisition of Countrywide, the source of many of its bad mortgages. In answer to a question regarding whether Bank of America could declare bankruptcy for Countryside, thereby possibly isolating the bank's mortgage exposure liabilities, Moynihan said the bank was exploring its options.
"If the bank got rid of Countrywide's litigation expenses and liabilities, it could have a $10 to $12 stock price overnight," Miller told ABC News. "It's not that we don't like company -- we have a hard time analyzing its balance sheet apart from all this litigation."
But Miller added that he did not think bankrupting Countrywide would be politically and legally feasible.
Moynihan has defended the company from investors and analysts concerned about the stock price which has fallen almost 47 percent this year.
Warren Buffett, CEO of Berkshire Hathaway, announced plans on Aug. 25 to buy $5 billion of Bank of America shares.
"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," Buffett said in a press release last month. "I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy."