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Fri, Oct 26, 2007 - Page 10 News List

Bank of America announces job cuts after earnings drop

AP , CHARLOTTE, NORTH CAROLINA

Bank of America Corp said on Wednesday it would cut 3,000 jobs, an announcement that came less than a week after the bank reported a huge drop in earnings for the third quarter.

The cuts will affect less than 2 percent of the company's staff. Most will be from Bank of America's Global Corporate and Investment Banking unit, the company said.

The bank also said it is launching a strategic review of its investment banking business.

Gene Taylor, head of Global Corporate and Investment Banking, will retire at the end of this year and be replaced by Brian Moynihan, who ran the company's Global Wealth and Investment Management business.

Taylor will help Moynihan with the transition. Moynihan will be replaced by Keith Banks, who runs the Columbia Management mutual funds arm, which is part of Bank of America's asset management organization.

"While some of these changes are a direct result of our underperformance, others have been contemplated for a number of months as we looked at how we could operate more effectively," Bank of America chief executive Kenneth Lewis said in a statement. "We must have a platform that operates profitably for both our company and our clients."

Last week, Bank of America said its profit fell 32 percent in the third quarter as trading losses and write-downs on a wide variety of loans offset solid revenue growth in most businesses.

Net income declined to US$3.7 billion, or US$0.82 per share, from US$5.42 billion, or US$1.18 per share, a year ago, and revenue fell 12 percent to US$16.3 billion.

The dismal performance was a major setback for Lewis and his goal to build a major investment banking presence on Wall Street.

"I've had all of the fun I can stand in investment banking at the moment," Lewis said last week after the third-quarter results were announced. "So to get bigger in it is not something I really want to do."

The job cuts are throughout the bank, but the majority are investment banking-related in areas such as business lending, treasury services, and capital markets and advisory services, as well as support staff. Investment banking is largely based in New York.

Last week, Chris Hentemann, head of Bank of America's global structured products unit, left the company.

Hentemann had been in charge of products such as mortgage-backed and asset-backed securities and related trading. Such investments plummeted in value this summer as rising defaults and foreclosures discouraged investors and led global credit markets to seize up.

The layoffs at Bank of America are among the largest at the bank under Lewis, who took control in 2001. The bank cut 12,500 positions after it acquired FleetBoston Financial in 2004, and an additional 4,500 in a follow-on restructuring. Upon his purchase of credit card issuer MBNA Corp last year, Lewis cut about 6,000 jobs. The bank plans to eliminate 4,000 jobs in this year's purchase of LaSalle Bank Corp.

Bank of America announced Wednesday's cuts after stock markets closed. The bank's shares fell US$0.18 in extended trading after falling US$0.30 to end the regular session at US$47.48.

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