CHARLOTTE, N.C. – Bank of America Corp. (BAC) said Thursday it will cut an additional 4,500 jobs, or 2.5 percent of its work force, beginning this month as a result of its merger with FleetBoston Financial Corp. (search)
Bank of America, which employs about 178,000 people, said the reductions will not affect employment commitments it made in New England after complaints by state officials in Massachusetts.
The cuts come in addition to 12,500 layoffs — or 7 percent of the banks' combined work force — that Bank of America had previously said it expected to result from the Fleet merger.
In midday trading on the New York Stock Exchange, Bank of America's share price was down 22 cents to $45.03, but that was still close to its recent 52-week high of $45.37.
The reductions will be largely be concentrated in support areas, such as finance, marketing and operations, and are expected to have very little impact among workers who deal directly with customers, such as tellers, bank spokeswoman Alex Trower said.
Before its merger with FleetBoston, which was approved earlier this year, the bank pledged to maintain employment levels in what it calls "customer-facing positions."
Bank of America said the cuts were made possible by combining consumer banking, consumer products and small business banking into one major banking line. In addition, the bank will move its premier banking division into the wealth and investment management organization.
Bank of America announced last month that the wealth and investment management business would move to Boston, concentrating one the company's four major business lines in Fleet's former headquarters city.
That move was viewed as an effort to reassure Massachusetts officials that the company is committed to the Northeast.
Bank of America also recently created a new group, technology, service and fulfillment, to streamline the bank's service infrastructure.
Trower said the reorganization of the bank, further cost savings identified during the merger and the fluctuations of the business cycle — particularly the rise in interest rates that is reducing mortgage activity — are driving the additional layoffs.
"Bank of America officials continue to maintain that we will have suffered no net job losses by early in 2006, but that is little solace to the people who are losing jobs now," said U.S. Rep. Barney Frank (search), D-Mass., one of the bank's leading critics, in a prepared statement. "Furthermore, while Bank of America tells us there will be 'ebbs and flows' before we reach that point in 2006, a pattern of continuous 'ebbing' leaves many of us skeptical."
Frank said the layoffs announced Thursday are a troubling counterpoint to the announcement that the wealth and investment management unit would move to Boston.
The bank said Thursday it expects the new round of layoffs to cost about $150 million in severance costs between the third quarter of this year and the first quarter of 2005.
Workers who lose their jobs are to receive career support resources, job posting services, extended benefits and severance pay.