Bank of America to Cut 12,500 Jobs
NEW YORK (Reuters) - Bank of America Corp. (BAC), the No. 2 U.S. bank, on Monday said it plans to cut 12,500 jobs over the next two years as a result of its $48 billion purchase of FleetBoston Financial Corp.
The cuts amount to about 7 percent of the combined banks' work force of more than 180,000. Bank of America said about 30 percent of the cuts will be through attrition.
"They feel like they have something to prove to Wall Street to convince investors like ourselves that they didn't pay too much for Fleet," said Larry Puglia, who runs the $7.6 billion T. Rowe Price Blue Chip Growth fund and owns Bank of America shares. "It is an unfortunate aspect of entering into large mergers like this that there will be some job losses."
Kenneth Lewis, chief executive of the Charlotte, North Carolina-based bank, has targeted $1.6 billion of cost savings from the merger, which was completed on April 1. The combined bank has about $938 billion of assets, 5,700 banking offices in 29 states and Washington, D.C., and about 36 million customers.
Bank of America said it will begin making cuts this month, and that most will affect support staff and areas where Bank of America's and Fleet's businesses overlapped. It said it began notifying employees of the cuts on Monday.
"When we discuss job reductions, we are talking about positions, not necessarily people," said new Chief Financial Officer Marc Oken in a statement. "These are difficult decisions."
Bank spokeswoman Eloise Hale said: "Decisions around reductions will be determined on maximizing our ability to run the combined organization. We are structuring the company to meet the best needs of our customers."
Bank of America said it will "strive" to find new employment opportunities at the bank for affected personnel. It said some New England jobs will be lost in the short-term, but that it will add new jobs to the region and is "committed" to maintaining overall New England employment levels.
Fleet was based in Boston.
Citigroup Inc. (C) is the largest U.S. bank. Bank of America is expected to drop to No. 3 when J.P. Morgan Chase & Co. (JPM) buys Bank One Corp. (ONE).
Bank of America shares rose 74 cents to $81.25 in Monday trading on the New York Stock Exchange. The shares have fallen less than 1 percent since the Fleet merger was announced on Oct. 27, while the Philadelphia KBW Bank Index (BKX) has risen 9 percent. Bank of America agreed to pay more than a 40 percent premium for Fleet. (Additional reporting by Jake Keaveny)
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