Bank of America may shed 35,000 jobs
Job cuts, over 3 years, will hit all units as the bank reviews operations in light of the weakening economy and the merger with Merrill Lynch.
NEW YORK (CNNMoney.com) -- Bank of America said Thursday it plans to slash up to 35,000 jobs over the next three years as it absorbs Merrill Lynch and contends with the deepening recession.
The Charlotte, N.C.-based bank, which will be the nation's largest financial services firm when the Merrill Lynch (MER, Fortune 500) deal closes in coming weeks, said it will announce a final job reduction plan in early 2009.
The cuts will come from both companies and will affect all lines of business. Bank of America had 247,000 employees, as of Sept. 30, while Merrill Lynch had 60,900 at the end of the third quarter.
While Bank of America had not announced any large-scale job cuts so far this year, Merrill Lynch eliminated about 3,300 employees since the fall of 2007, mainly in its global markets and investment banking division and in support areas.
"The reductions are designed to eliminate redundancies created as a result of the merger with Merrill Lynch and to reflect the current recessionary environment," Bank of America (BAC, Fortune 500) said in a statement.
Bank of America is likely to keep many of Merrill Lynch's financial advisers, who numbered 16,850 at the end of September, said Scott Rothbort, president of Lakeview Asset Management, which owns Merrill Lynch and plans to hold onto its Bank of America shares after the merger. It's one of the main reasons why the bank bought the nation's largest brokerage firm.
"Most of the brokers are going to stay," Rothbort said.
Those in the companies' capital markets divisions - the traders, analysts and sales representatives - won't be as lucky, he predicted.
The announcement comes just a week after shareholders at both companies approved the deal. The merger ends the independence of Merrill, the storied Wall Street investment bank founded in 1914.
The deal valued Merrill at $50 billion when it was announced on Sept. 14, the day before Lehman Brothers declared bankruptcy. Bank of America shares have fallen 46% since then, putting the value on the merger at just under $20 billion.
Since the merger was announced, both Bank of America and Merrill Lynch have received funds under the Treasury's Troubled Asset Relief Program (TARP) established as part of the $700 billion bailout of the financial services industry. Bank of America received $15 billion, while Merrill Lynch got $10 billion.
Responding to criticism that banks haven't used the bailout money to lend, Bank of America is running advertisements detailing their commitment. The bank says in the past three months it has funded more than $50 billion in home loans, financing more than 250,000 homes.
"The tightening mortgage market should not squeeze out qualified homebuyers," the ad reads. "That's why we're putting our capital where our mouth is."
Bank of America joins a growing list of financial services companies slashing staff amid the continuing credit crunch and downturn in consumer spending. Citigroup (C, Fortune 500) said last month it would cut more than 50,000 jobs, while Morgan Stanley (MS, Fortune 500) said it would slash 10% of its institutional securities division and 9% of its money management business. In October, American Express (AXP, Fortune 500) announced it would shed 7,000 jobs and Goldman Sachs (GS, Fortune 500) said it would cut 3,260 positions.