Bank Of America To Cut Work Force

The singer Peaches performs at the Bring 'Em Home Now! 3rd Iraq War Anniversary Concert at Hammerstein Ballroom March 20, 2006, in New York. GETTY IMAGES/Scott Gries

Bank of America Corp. will cut as many as 10,000 jobs across the country over the next year to try to improve earnings and efficiency.

The cuts, about 7 percent of the Charlotte-based bank's 150,000-person work force, will focus on middle- and upper-level management, as well as jobs made unnecessary by improvements in efficiency, the bank said Friday.

The company's chairman said the company needs to concentrate on improving its daily business.

"We have been saying for some time that our days of growth by merger and acquisition are behind us," said Chairman and CEO Hugh L. McColl, Jr. "We've assembled the right parts, but after years of additions, our resulting structure is neither as efficient nor as effective as it needs to be."

Some cuts will come through attrition, but many will be through the elimination of positions. The cuts, which should be 9,000 to 10,000 positions, are part of the aftermath of several mergers the company has undergone, bank spokesman Scott Scredon told CBS News Reporter John Repp.

"Banking is sort of not your father's Oldsmobile," Scredon said. "It's changing every day, and banks have to change every day to keep up."

The resulting savings from the changes will be invested in Internet initiatives and other programs to boost efficiency, bank President Kenneth Lewis said.

Other plans include opening 10 additional private banking offices in California and other high-wealth markets, investing more in debit card business and spending more this year on advertising, Lewis said.

Analyst Andrew Collins of ING Barings called the job cuts "the right thing to do" and said they were pushed by an industrywide drive to offer move services over the Internet.

"It's defensive as well as offensive. They've gotten most of the Bank of America integration issues behind them, and I think they're now just trying to really get in fighting shape, so to speak," Collins said.

Shares of Bank of America fell 37.5 cents to $46.375 in morning trading on the New York Stock Exchange.

The bank, the nation's second-largest behind Citigroup in terms of assets, was created in 1998 when Charlotte-based NationsBank acquired San Francisco-based BankAmerica.

As of June 30, Bank of America employed 150,854 people, more than 11,000 fewer than a year earlier.

The bank reported earlier this month that second-quarter earnings were $2.06 billion or $1.23 per share, essentially flat from a year earlier. Net income in the same quarter last year was $1.92 billion, or $1.07 per share, including a $145 million after-tax merger-related charge.

Rival First Union has recently announced its own cuts. The restructuring at that Charlotte-based bank affects roughly 3,500 employees.

Analysts have said Bank of America's difficulties have come as it shifts is growth strategy. After growing in the 1990s by acquiring other institutions, Bank of America is now looking to get more revenue from existing operations.

Bank of America has more than 4,500 branches in 21 states. It serves more than 30 million households and 2 million businesses.


©2000, CBS Worldwide Inc., All Rights Reserved. Information from the Associated Press was included in this report
  • CBSNews.com staff CBSNews.com staff

Comments