BofA’s Moynihan Sees More Job Cuts as Economy Sputters
Bank of America Corp. Chief Executive Officer Brian Moynihan will press on with a plan to cut more than 30,000 jobs as revenue stays flat.
“I think we continue to reduce our headcount -- you can see it in our patterns, it’s really based on demand,” Moynihan, 53, said in an interview with Bloomberg Television in Tokyo today. “As we continue to get through the mortgage issues at Countrywide, you’ll see the headcount come down substantially.”
Bank of America, the second-biggest U.S. lender, is among financial firms cutting expenses to restore profitability after the 2008 crisis sent borrowers into delinquency and pushed the global economy into the deepest slump in at least seven decades. Moynihan announced $3 billion of cuts at the company’s investment bank, trading and wealth-management units in July.
In March, Moynihan promised “demonstrable progress” on job cuts every quarter, with more than 30,000 positions in retail and support targeted for elimination.
“Our revenues are flat because of the interest-rate environment, the economic environment, therefore we have to bring in the costs in,” Moynihan said. “When I talk to our clients and customers, they don’t expect to hire a lot more people because of the amount of uncertainty in the market.”
Losses at Bank of America’s Countrywide Financial Corp., the mortgage unit that was careering toward collapse in 2008, narrowed to $768 million in the second quarter from $14.5 billion in the same quarter of last year.
In housing, “everything that we see points that the worst is over, from the amount of delinquent loans, to the amount of seriously delinquent loans to the amount of backlog homes that are still going through the process,” Moynihan said today.
Trading and investment-banking revenue at the five largest Wall Street firms dropped 18 percent in the second quarter. Deal and trading volume fell amid concern that Greece would leave the euro and the region’s sovereign-debt crisis would spread to other nations, including Spain. The decline led to questions about whether banks could cut costs to improve returns.
Banks’ profitability is being squeezed by sluggish deal making and new rules on capital, McKinsey & Co. said in an annual review of the industry published this week.
“Like many of our peers, equity issuance is down, so we’re downsizing some of those businesses,” said Moynihan. “But our corporate banking business and our treasury management business continue to grow and we continue to add people in Asia and around the world.”
To contact the editor responsible for this story: Edward Evans at email@example.com