Funds News

Bank of America to cut 7,500 jobs post-merger

BANGALORE (Reuters) - Bank of America Corp on Thursday said it expects to eliminate about 7,500 jobs over the next two years after it completes its acquisition of Countrywide Financial Corp, the largest U.S. mortgage lender.

A Bank of America ATM location is seen in Somerville, Massachusetts May 5, 2008. REUTERS/Brian Snyder

The job cuts amount to about 3 percent of the combined companies’ work forces. Bank of America said it ended March with about 209,100 employees while Countrywide said it employed about 50,400 at the time.

Bank of America, the second-largest U.S. bank, said the cuts will be nationwide and mostly in areas where the companies have significant overlap, such as staff support.

The bank said it expects to begin notifying affected employees in the third quarter and will offer severance packages to eligible workers. It expects “substantial cost savings” from the merger.

Charlotte, North Carolina-based Bank of America expects to complete the transaction on July 1.

Calabasas, California-based Countrywide has already cut some 11,000 employees since the middle of 2007 as loan losses began to mount and it curtailed offerings of risky loans such as subprime mortgages and “option” adjustable-rate mortgages.

Shareholders of Countrywide are expected to receive 0.1822 of a Bank of America share for each of their shares.

Those terms valued Countrywide at about $4 billion when the companies announced the merger on Jan 11. That sum has fallen by about one-third, however, because Bank of America’s shares have also declined. Bank of America shares fell on Thursday to their lowest level since April 2001.

Regulators have approved the merger, and Countrywide shareholders overwhelmingly approved it on Wednesday.

Bank of America shares were down $1.80, or 6.8 percent, at $24.81 while Countrywide shares were off 13 cents, or 2.8 percent, to $4.45 in late afternoon trading on the New York Stock Exchange,

Reporting by Jonathan Stempel in Bangalore; Editing by Gerald E. McCormick