12,000 Jobs Lost In Bank Merger

(CBS/AP)  Bank of America Corp., now the No. 3 bank in the country, will cut 12,500 jobs — or nearly 7 percent of its 181,000-employee work force — over the next two years.

The Charlotte, N.C.-based financial giant announced the job cuts Monday. Last week, it completed its $47 billion merger with FleetBoston Financial Corp., creating a bank with operations stretching from North Carolina to New England to California.

Bank of America chief executive Ken Lewis has said he wants to achieve about $1.6 billion in cost savings by the end of 2005. The merging banks have relatively few overlapping branches that can be closed, which is a major source of savings in many bank mergers.

Instead, the bank has said it expects to get about $650 million in savings from trimming overlapping operations and processes. For example, the bank will be able to consolidate headquarters for combined business lines, Lewis has said.

"The company does not expect interruption in customer service or quality as a result of these reductions," a statement said.

The first affected employees will be notified this month.

About three in 10 of the cuts will be realized as workers who quit or retire are not replaced, the company said. The rest, about 8,750 jobs, are being eliminated through layoffs and vacancies that won't be filled.

The cuts will begin this month, as the company starts to notify affected employees from its combined work force of 181,000.

"When we discuss job reductions, we are talking about positions, not necessarily people," said Marc Oken, transition executive for Bank of America. "As a large employer, we will continue to create jobs over time. These are difficult decisions and we are committed to supporting our associates during this time."

Workers leaving corporate headquarters in downtown Charlotte after work Monday had not heard about the coming job cuts.

"There's been a lot of talk around the office, but no one has given me any indication whatsoever that I need to worry," loan officer Veronica Dawkins said. "I'm hoping it works out for everybody."

Doug Smith said he's hoping to avoid bad news when he returned to work Tuesday. "There's really nothing you can do about it now," he said.

Spokeswoman Eloise Hale said the bank would not specify where positions would be eliminated, saying only that they will take place "corporation-wide."

As part of its merger agreement, the company committed to maintain overall employment levels in New England.

The bank will attempt to find new opportunities within the bank for workers affected by the eliminated positions. According to the bank, it filled more than 37,000 positions last year through a combination of internal transfers and external hires.

The expanded bank has about 5,700 branches and 16,500 ATMs nationwide, a presence in 150 countries and assets estimated at $966 billion. It controls about 9.9 percent of U.S. banking assets.

Given the size of the combined company, the merger raised several concerns other than job losses when it was proposed, according to a Federal Reserve report on public comments about the deal.

Some raised the specter of a reduction in customer service or an increase in fees, while others predicted the combined back might offer fewer loans in poor neighborhoods.

The Fed did not find those arguments compelling, and approved the deal in March.