About four dozen of the bank's top executives met last week to review Project New BAC, named after the company's stock ticker symbol, a person familiar with the plan had said. Moynihan told investors on Aug. 10 that money saved from the initiative "will be both material and substantial," which the bank needs as the economy slows and new federal regulations cut revenue.
The multi-month effort behind Project New BAC is a way of "reengineering your processes, particularly appropriate for a company that's a product of mergers and integrations," according to Alastair Borthwick, co-head of global capital markets and a participant in the planning.
For example, the managers found that the company's internal financial reporting has "a high degree of frequency, a high degree of completeness, and a high degree of detail," Borthwick said in an Aug. 31 interview. "What we're asking is, can we live with fewer, smaller, less-detailed reports across the entire firm?"
Borthwick realized in his own European equity business that he was getting daily reports describing what had happened that day. They were so "extremely well-written" and "incredibly precise" that he figured someone was spending an hour or more a day on them. From his desk at One Bryant Park in New York one July day, he hit reply-all after getting his daily report and requested that the notes stop or say simply that nothing material had happened, or be written periodically only if there were important news.
If "I and my colleagues can live with 20 percent less reports, and the 20 percent less time spent on those activities, then it allows your finance teams to get after higher-value- added activities."
Bank of America fell 48 percent this year through last week, the worst performance in the Dow average and 24-company KBW Bank Index, as investors focused on costs tied to the Countrywide takeover and speculated the firm may issue new shares to boost capital. Last month, American International Group Inc. added to the woes, suing to recoup at least $10 billion in losses on mortgage bonds. Bank of America said AIG was to blame and that the New York-based insurer was an "informed, seasoned investor."
Such disputes "will take a lot longer -- and it's in our best interest to have it take longer," Moynihan, who has a law degree and served a stint as general counsel, said in a Sept. 6 interview. "You have to chop away at them, as the legal teams will do. It's going to stay with us for a long time because it's not in our best interest to do something there until we chop the cases down and get people to be more realistic."
In an Aug. 18 memo, Moynihan disclosed 3,500 job cuts that will affect operations across the firm and include as much as 5 percent of the investment-banking unit, or about 600 people, two people with knowledge of the plans said last month.
"This obviously is a challenging time for our company in the markets, and for our shareholders," Moynihan said in the memo. "I know it is tough to have to manage through reductions, but we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully."
Bank of America leaders had been "fighting a different battle" before, and that was to gain scale, Moynihan said in the interview. His predecessor, Kenneth D. Lewis, spent more than $130 billion assembling a company with leading positions in deposits, credit cards, mortgages, investment and corporate banking and wealth management. The firm had $2.26 trillion in assets as of June 30.