* BofA plans to cut 300 investment banking jobs-sources
* Second phase of efficiency program expected to cut fewer
* Investment banking key source of profits for bank
By Rick Rothacker
May 1 Bank of America Corp is planning
to cut about 300 jobs in its investment banking and capital
markets group, as it struggles to rein in costs to make up for
weak revenue growth, sources familiar with the situation said on
The layoffs are not nearly as eye-popping as the bank's job
cuts in areas like retail banking. Wall Street companies have
broadly been looking at cutting jobs recently.
The bank, The second-largest in the United States by assets,
is also assigning junior bankers to work with broader groups of
companies, the sources said. That move could also lead to more
layoffs, the sources said.
The changes for junior bankers are part of the cost-cutting
program known as "Project New BAC," which the bank launched last
year, the sources said. The program, named for the bank's ticker
symbol, is meant to improve profits as a sluggish economy
weighs on revenue growth, and new regulations boost compliance
The first phase of the program is expected to cut about
30,000 jobs and $5 billion in annual expenses in consumer and
technology areas over the next several years. Plans for the
second phase, which covers investment banking, sales and
trading, commercial banking and wealth management, are expected
to be finalized in May.
Bank of America declined to comment on its plans for the
second phase. In earnings conference calls, executives have said
the second phase will produce fewer job cuts and less savings
than the first phase because it covers a smaller and more
efficient area of the company.
Trimming expenses in the bank's institutional businesses is
a delicate task because these operations, bulked up by the 2009
Merrill Lynch acquisition, have produced much of the bank's
profit in recent years.
Still, Bank of America and other Wall Street firms, have
been scaling back after market volumes slowed last year amid
concerns about the European debt crisis. In the first quarter,
Bank of America's trading revenue and investment banking fees
rebounded from a weak fourth quarter but were still down from a
"Clearly on the margin this quarter you feel better about
the overall sales and trading opportunity, (but) it's not going
to change the rigor and discipline with which we go through" the
second phase of New BAC, Chief Financial Officer Bruce Thompson
said during the bank's first-quarter earnings call.
Bankers in equities, mergers and acquisitions, and sales and
trading, where business has slowed, are bracing for job cuts in
coming weeks, sources familiar with the matter said.
Higher-ranking managing directors whose salaries have increased
in compensation for reduced bonuses could be targeted in the
reductions, sources said.