Bank of America Corp., the second-biggest U.S. lender, eliminated some managers from a unit catering to wealthy families as it cuts costs, said two people with knowledge of the move.
Executives who oversaw trust officers and private-client advisers at the firm’s U.S. Trust unit were dismissed this month amid a companywide review of expenses at the Charlotte, North Carolina-based bank, said the people, who requested anonymity because the plans are private. They declined to say how many of approximately 40 managers were affected.
Bank of America Chief Executive Officer Brian T. Moynihan is seeking ways to lower expenses without reducing the productivity of wealth managers. He has said he’ll reveal details next month of how his efficiency effort, Project New BAC, may trim as much as $3 billion in annual expenses in the firm’s wealth-management and investment-banking units.
“Firms are tightening their belts and their mentality is that as long as it’s not client-facing, they’re OK to go,” said Mindy Diamond, president of Diamond Consultants LLC, a Chester, New Jersey-based executive-search firm. “But there’s no question that this impacts those employees who remain.”
Trust officers help ensure the firm adheres to the legal rules of a specific trust when handling a client’s assets. They report to trust executives, some of whom were targeted for dismissal, who oversee a region typically the size of a city. Some managers overseeing private-client advisers were also cut, the people said.
U.S. Trust, which has about 4,300 employees, banned nonessential travel last year for some personnel as a cost-saving measure, the people said. Keith Banks, president of U.S. Trust, didn’t return a call seeking comment.
U.S. Trust, founded a decade before the Civil War, is the country’s biggest company managing trusts, the firm said, citing Federal Deposit Insurance Corp. data. Trusts are typically set up by wealthy families or institutions to handle assets for offspring or charities.
Bank of America bought the business from Charles Schwab Corp. in 2006 for $3.3 billion and combined it with Merrill Lynch & Co., which it purchased in 2009, to create its wealth-management division. Bank of America had about 19,000 wealth advisers with $2.2 trillion of client balances as of March 31.
Unit for Sale
Shares of the bank rose 4.9 percent to $8.14 at 10:27 a.m. in New York, bringing its gain for 2012 to 47 percent. That’s the best showing for the day and the year to date in the Dow Jones Industrial Average.
The lender plans to cut more than 300 jobs from corporate and investment banking and trading units, a person briefed on the matter said last month. The bank is in talks to sell its non-U.S. wealth-management operations to Zurich-based Julius Baer Group Ltd., a transaction that may reduce headcount by less than 2,000.
Moynihan has said that the first phase of his cost-cutting plan, announced last year, would trim $5 billion in expenses and eliminate 30,000 jobs from retail banking and support units. Bank of America had about 278,700 employees as of March 31.