BofA Said to Cut Jobs Across Montag’s Banking, Trading DivisionsHugh Son, Bei Hu and Lisa Abramowicz
Bank of America Corp. is cutting jobs across co-Chief Operating Officer Thomas Montag’s global trading and investment banking units, according to three people with direct knowledge of the decision.
The dismissals at the second-biggest U.S. bank will affect fewer than 5 percent of employees in the units, said one of the people, who requested anonymity because the moves haven’t been made public. Some staff members volunteered to go, the people said. Kerrie McHugh, a spokeswoman for the Charlotte, North Carolina-based company, said it had no comment.
Banks have been cutting workers for the past five years and still haven’t settled on the right workforce size amid stagnant revenue and tougher regulation. JPMorgan Chase & Co. and Citigroup Inc. warned investors that trading revenue so far in the first quarter, when firms typically earn the most from that business, was down about 15 percent.
“Wall Street may be in the seventh inning of what it is going to be post-crisis,” said Richard Lipstein, managing director of New York-based recruiting firm Gilbert Tweed International. “This is an ongoing process that occasionally results in a material number of layoffs. In fixed income, they’re looking at a shrinking business and figuring out how to match expenses and headcount with revenue.”
The banks are pruning employees and making selective hires this month in hopes of improving profits. Revenue from trading and investment banking at the nine biggest global firms fell 4 percent to $160 billion in 2013, as weakness in fixed income outweighed gains in equity trading and fees from advising and underwriting.
Thomas Skove, head of U.S. investment-grade industrials trading at Bank of America, was among those cut, said two of the people. Other fixed-income employees who lost jobs included Roger Platt, Jonathan Taylor and Keith Tamayo, the people said. Skove, Platt and Tamayo said they couldn’t comment, and Taylor didn’t return a voicemail message.
The bank hired Jon Klein from Zurich-based Credit Suisse Group AG this month as a managing director in investment-grade trading, people with knowledge of the move said last week.
More jobs may be eliminated this year at lenders including Frankfurt-based Deutsche Bank AG, Germany’s biggest, and Barclays Plc, the U.K.’s second-largest.
Deutsche Bank is weighing reductions in coming months, on top of 2,000 announced in 2012, across corporate finance, capital markets and trading businesses, said two people with knowledge of the bank’s plans. The cuts are partly a result of the company’s decision to increase base pay for senior bankers as European Union curbs on variable compensation kick in, boosting fixed costs, the people said.
Barclays is planning an overhaul of the investment bank, including staff reductions and exiting some unprofitable businesses this year, a person with knowledge of the matter said last week. The London-based firm outlined plans in February to eliminate 12,000 jobs to curb costs after fourth-quarter profit declined.
Financial firms worldwide announced plans to cut a total of more than 317,000 jobs over the past two years, data compiled by Bloomberg show.
Wall Street’s clients are trading less as the Federal Reserve slows its monthly asset purchases and leaves bond investors preparing for rising interest rates. An index of global equities tumbled earlier this month, erasing the year’s gain, as Russia’s growing military presence in Ukraine prompted an emerging-market sell-off.
Citigroup finance chief John Gerspach said on March 3 that his firm expects trading revenue to drop by a “high mid-teens” percentage in the first quarter, less than a week after JPMorgan Chief Executive Officer Jamie Dimon said revenue from equities and fixed income was down about 15 percent.
Bank of America rose 1.5 percent to $17.44 yesterday in New York. The shares have climbed 12 percent this year, outpacing the 3 percent advance for the 24-company KBW Bank Index.
Bank of America’s global equities head, Fabrizio Gallo, reorganized his business into three new groups earlier this year. Execution services houses cash equities, exchange-traded funds and the swaps business; client solutions includes the margin-loan and structured-finance activities; and asset management includes prime brokerage, securities lending and futures, Gallo said in a Jan. 30 memo obtained by Bloomberg News.