Toxic mortgage loans prompt Bank of America restructuring
Mortgage loan problems threaten bank of America. Up to 750 branches could close, and 45,000 layoffs could result as the banking giant splits into separate consumer and commercial units, struggling under the weight of toxic mortgage loans.
Bank of America is considering cutting at least 10 percent of its work force as part of a massive restructuring, according to published reports.
The Wall Street Journal said that officials at the Charlotte, N.C. bank have discussed cutting 40,000 employees, or 14 percent of its 288,000 total staff. Bloomberg put the job cuts at about 10 percent. They each cited people that were not identified by name.
A spokesman for Bank of America wasn't immediately available to comment before business hours on Friday.
Bank of America Corp. has already cut at least 6,000 jobs this year as part of its reorganization under CEO Brian Moynihan, who has been in the top spot since last year. Moynihan earlier this week unveiled a shake-up in the bank's management ranks, announcing that two key officers will leave and the promotion of two others to share the chief operating officer role.
The bank, still struggling under the weight of toxic mortgage loans, says the moves are part of "delayering and simplifying" operations. It has more employees than most of its major competitors, and top executives have stressed the need to eliminate redundancies resulting from past acquisitions.
The Journal said that most of the job cuts are expected to be made on its consumer side. It got rid of 63 unprofitable branches between April and June and said it plans to close 750 of its nearly 6,000 locations in the next several years.
Bank of America Corp. started a cost cutting program called New BAC in the spring. Moynihan said Tuesday that the second phase of New BAC will begin next month and run through March.
Its shares slipped 5 cents to $7.15 in premarket trading Friday.