(Bloomberg News) Bank of America Corp., the biggest U.S. lender by assets, will eliminate 30,000 jobs in the next few years as part of Chief Executive Officer Brian T. Moynihan's plan to bolster profit and the company's stock.
The reductions, equal to about 10 percent of the firm's workforce, are part of the first phase of an overhaul that aims to remove about $5 billion in annual costs by the end of 2013. Moynihan's plan, dubbed Project New BAC, included a management shakeup last week that elevated Thomas K. Montag and David Darnell to co-chief operating officers and left Sallie Krawcheck and Joe Price without jobs.
"We don't have to be the biggest company out there, we have to be the best," Moynihan, 51, said today at an investor conference in New York. "We can get out of things we don't need to do, make the company leaner, more straightforward, more driven."
Bank of America announced the job cuts in a statement minutes after President Barack Obama began delivering remarks about his efforts to increase employment. The Charlotte, North Carolina-based company is seeking to shave about 18 percent of $27 billion in consumer-related expenses, Moynihan said.
The bank advanced 7 cents, or 1 percent, to $7.05 at 11:19 a.m. in New York Stock Exchange composite trading, the best showing in the Dow Jones Industrial Average. The company already ceded the title of largest home lender to Wells Fargo & Co., and slipped to No. 2 in deposits at midyear behind New York-based JPMorgan Chase & Co.
As of June 30, Bank of America still ranked as the largest employer among U.S. lenders with about 288,000 people. San Francisco-based Wells Fargo, which has the largest branch network, and New York-based Citigroup Inc. are next largest, with more than 260,000 employees. JPMorgan, the most profitable U.S. bank, had about 250,000 workers.
The first phase of Project New BAC focuses on consumer banking, credit cards, home loans and technology, Moynihan said. The second phase will begin in October and continue through March, covering other businesses and operations, according to the firm's statement.
"When you take Phase 1, and combine with Phase 2, we feel comfortable we'll get back to the 55 percent efficiency ratio we talked about in March," Moynihan said.
Moynihan has sought to bolster capital at the bank and confidence among investors after a 54 percent slide in the stock from the time he became CEO in January 2010 through last week. His tenure includes posting a record $8.8 billion quarterly loss, committing $30 billion to clean up faulty mortgages and selling at least $40 billion of assets and preferred shares.
Profit is under pressure mainly because of losses, legal costs and writedowns tied to the 2008 takeover of subprime lender Countrywide Financial Corp. At the same time, revenue is shrinking as the U.S. economy slows. Moynihan has said that because the bank is one of the biggest consumer lenders, its fortunes are closely tied to home prices and the jobless rate.