Bank of America Would Spare Only Two Headquarters in Plan to Sell Offices
Bank of America Corp., the second- largest U.S. lender by assets, may sell all its offices as part of the company’s effort to cut costs, sparing only its headquarters in North Carolina and New York City.
“We are currently reviewing all of our properties across our portfolio, with the exception of Bank of America Corporate Center in Charlotte and Bank of America Tower at One Bryant Park” in Manhattan, Kelli Raulerson, a spokeswoman, said today. The lender owned or leased about 120 million square feet in 26,910 locations at the end of 2010, mostly in the U.S., according to its last annual report.
Chief Executive Officer Brian T. Moynihan, 52, is reevaluating the bank’s real estate needs as he eliminates at least 30,000 positions and seeks to trim as much as $8 billion in annual expenses. If Bank of America sells buildings, it will lease back space for operations, avoiding impact on employees, the company said in a statement provided by Raulerson.
The bank already plans leasebacks at three sites: the Fifth Third Center and the Hearst Tower in Charlotte and at 222 Broadway in Manhattan, Reuters reported. It’s also reviewing whether to sell its building at 100 Federal St. in Boston, the Boston Globe reported today.
Project New BAC
Moynihan unveiled initial details in September for his cost-cutting plan, dubbed Project New BAC, which divides the company into two parts, each with about $27 billion in annual expenses. He targeted $5 billion in annual reductions from retail and back-office operations, mostly accomplished through eliminating jobs, and he may trim as much as $3 billion from investment and commercial banking, trading, and wealth- management units in the latest phase.
The property divestitures are unrelated to efforts to boost the firm’s capital levels to comply with new international rules, said a person with knowledge of the plans. The bank sold $33 billion in assets last year, helping boost Tier 1 common equity, a measure of its ability to absorb unexpected losses, to 9.86 percent in the fourth quarter from 8.65 percent in the previous three-month period.
Bank of America rose 5.2 percent to $7.84 in New York as the broader Standard & Poor’s 500 Index climbed 1.5 percent after better-than-forecast growth in U.S. jobs. The stock is up 41 percent this year after falling 58 percent in 2011.
Bank of Nova Scotia had its biggest gain in about six weeks on Jan. 19 after the Toronto-based lender said it may sell its Scotia Plaza office tower, which would allow it to raise capital without selling shares.
To contact the reporter on this story: Hugh Son in New York at email@example.com.