Executives at Bank of America® are unhappy with the projected cuts of 10,000 employees. That’s why they are upping the number, and plan on cutting from 25,000 to 30,000 jobs over the next few years.
On top of Bank of America®‘s (NYSE: BAC) efficiency plans to shed around 10,000 unnecessary jobs, the bank plans on broad cuts to the company’s workforce, which is almost 300,000 strong. With more employees than any other U.S. bank, a 10 percent decrease in its workforce would put the number of employees closer to JPMorgan Chase (NYSE: JPM), which has around 38,000 fewer.
This potential move is also reminiscent of recent plans made public by HSBC (NYSE: HBC).
HSBC wants to cut 30,000 workers (also around 10 percent of its workforce) from Europe and America. However, they plan on hiring around half that number in rapidly expanding Asian markets.
BofA on the other hand has no plans of expanding into other markets, but does want to streamline efficiency and improve profitability. The massive layoffs would be part of the effort launched by CEO Brian Moynihan called Project New BAC to reduce nonessential costs.
That project was announced in April.
In order to find the weak links, bank executives are first focusing on the consumer side of the bank, the ailing and troublesome mortgage business and staff functions.
In fact, Moynihan sent a memo to senior leaders last month to review “ideas for change.” The memo stated, “we expect to begin communicating major outcomes and next steps soon thereafter.”
Thankfully, the project has taken into account ideas from employees to reduce bureaucracy for workers and improve service to customers. There is definitely a stigma now attached to big banks, which introduce new fees practically every day and are becoming synonymous with apathy. However, these and other spend cuts should result in as much as $1.5 billion saved in quarterly expenses.
By cutting excess workers and putting more money into the services the bank offers, especially at a time when it’s difficult for banks to increase revenue, the bank hopes to boost profits. This is essential as BofA needs to accumulate capital for disastrous mortgage related losses and new international standards, while also keeping in mind that its stock has plunged over 40 percent since the beginning of this year.