By Hugh Son – Feb 17, 2012
Bank of America Corp., the U.S. lender seeking to trim costs in investment banking, told equities-unit employees to expect targeted dismissals next month, said two people with knowledge of the message.
The firm started to inform workers this week of reductions scheduled for about March 15, said the people, who asked for anonymity because the communications are private. Managers told employees the number of jobs affected wasn’t final yet, and that the dismissals were meant to free room to hire outsiders while leaving headcount almost unchanged, the people said.
“This reinforces that the equities business continues to be under significant pressure,” said Richard Lipstein, a managing director for Boyden Global Executive Search in New York. “By hiring in spots, they could be trying to increase their focus in specific areas or getting people who are considered better performers.”
Wall Street firms have reduced staff and pay after revenue slumped from trading and underwriting equities and debt last year. The latest firings at Bank of America’s global banking and markets division aren’t part of Chief Executive Officer Brian T. Moynihan’s efficiency plan, which seeks to cut as much as $8 billion in annual costs, said the people.
Employees were told this week that results improved from the beginning of the year, said one of the people. In the fourth quarter, equities sales and trading revenue dropped 16 percent to $660 million. The global banking and markets unit, run by co- chief operating officer Thomas K. Montag, posted a $433 million loss in the fourth quarter.
“Tom and his team don’t aspire to lose money in trading,” Moynihan, 52, told employees in a Jan. 19 staff meeting.
Moynihan said last month that he’ll trim as much as $3 billion in expenses from investment and commercial banking, trading and wealth management. That phase, scheduled to be complete in April, will probably include more dismissals at the Charlotte, North Carolina-based lender.
Kerrie McHugh, a Bank of America spokeswoman, said she couldn’t comment. Financial firms around the world have disclosed plans to eliminate more than 200,000 jobs.
Executives told the company’s investment bankers last month to expect compensation averaging 25 percent less than last year, people with knowledge of the discussions said. Instead of cash, employees were awarded about $1 billion of their year-end pay in Bank of America shares that can be sold starting this week.
Bank of America lost market share last year to rivals including Morgan Stanley in the trading of equities, bonds, currencies and commodities, Matthew O’Connor, an analyst at Deutsche Bank AG, said in a Jan. 19 research note.