(Reuters) – Bank of America Corp is speeding up planned job cuts as revenue continues to decline amid new regulations and a tepid economy, the Wall Street Journal reported.
The second-largest U.S. bank intends to slash 16,000 jobs by year-end, putting it a year ahead of a plan to eliminate 30,000 under a cost-cutting program called Project New BAC, the newspaper said, citing a document given to top management.
The bank began cutting jobs last fall and had been expected to complete the task by the end of 2013.
Bank of America has lagged rivals in recovering from the financial crisis, largely due to mortgage-related losses. Total revenue has declined for four straight quarters, raising investor concerns about how it will boost earnings.
“Given the uncertainty in the economy, expense savings and efficiencies are the primary catalyst that they have for earnings growth over the next year,” Guggenheim Partners analyst Marty Mosby said.
Other banks are also turning to cost-cutting as a way to improve profits, Mosby said.
A person familiar with the planning for New BAC told Reuters the reported acceleration of the cost-cutting was surprising because the plan was on track and had been well-received by Wall Street.
One challenge in cutting jobs more rapidly will be implementing new systems fast enough as more work is automated, the person said.
Since taking the helm in 2010, Chief Executive Brian Moynihan has been working to streamline and reduce risk at Bank of America by selling off assets and business units not considered essential. The bank has lost its perch as the largest U.S. bank by assets and could fall below JPMorgan Chase & Co and Wells Fargo & Co in total employees.
The bank had 275,460 employees at the end of the second quarter, down about 3 percent since Moynihan became CEO.
Bank of America spokesman Larry Di Rita declined to comment on the bank’s cost-cutting plans.
Under Project New BAC, Bank of America has said it planned to eliminate $5 billion in annual expenses and 30,000 jobs by the end of 2013, largely through cuts in consumer and technology areas. A second phase is expected to eliminate $3 billion in annual expenses by mid-2015 by making undisclosed cuts in capital markets, commercial banking and wealth management areas.
In the second quarter, cost savings from the first phase were running at an annual pace of $970 million, behind a goal of $1 billion, the Journal said, citing the document.
Bank of America shares were down 0.75 percent at $9.22 in afternoon trading.
Separately, Bank of America has named Anne Walker head of global corporate strategy and investor relations, replacing Thong Nguyen, who has moved into a consumer banking position after less than a year in the role.
Walker, who joined the company in the 2009 Merrill Lynch acquisition, will report to Chief Financial Officer Bruce Thompson, people familiar with the matter said. Investor relations director Kevin Stitt, who previously reported to Thompson, will now be under Walker.
Nguyen, who has worked with Moynihan at Bank of America and at FleetBoston Financial, is now head of retail, strategy, sales and operations, reporting to Katy Knox, head of retail banking and distribution. The bank’s consumer unit, which has lost revenue due to new regulations, has been closing branches to cut costs.