BofA Chief Sees Europe Crisis’s Indirect Impact as Bigger Threat
Concern that European nations may not be able to pay their debts has already slowed the world’s economy, Moynihan said today at a Manhattan investor conference. His Charlotte, North Carolina-based company is ranked second by assets among lenders in the U.S., where Moynihan said consumer spending is being aided by lower gasoline prices and corporations keep finding ways to adjust their models to bolster profits.
Consumers are “feeling and getting in better shape” as the jobless rate steadies, Moynihan said. “Europe and everything colors the viewpoint of the people around the capital markets. But if you look out in general America, consumer spending is consistently up month after month after month.” Some of the bank’s business teams need to do a better job to increase commercial lending, Moynihan said.
Bank of America and its rivals are under pressure as new regulations pinch revenue and Europe’s debt crisis roils financial markets. Moynihan’s goals include trimming as much as $8 billion from expenses with a plan that includes 30,000 job cuts in retail and support operations. More than 300 jobs may be eliminated from corporate and investment banking and trading units, a person familiar with the matter has said.
Bank of America gained 34 percent this year through yesterday’s close, the best showing in the Dow Jones Industrial Average. (INDU) The shares were still down about 36 percent from year-earlier levels.
Moynihan, 52, has said he’s counting on trading units to help revive income at the lender, whose consumer operations have been hobbled by more than $42 billion of expenses tied to faulty mortgages and foreclosures.
While Moynihan has said he’s striving to put those problems behind the company, Bank of America had to meet a new demand this month from Freddie Mac, the mortgage buyer controlled by the U.S. government, for refunds on $330 million of defective home loans. Most of the mortgage pools affected were drawn up as recently as 2010 and 2011, according to analysts at Barclays Plc.