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* Dan Milmo in New York
* The Guardian, Friday 12 December 2008 Bank of America announced last night that it is to cut up to 35,000
jobs, as it becomes the latest financial institution to respond to the
credit crunch with a sweeping redundancy programme.
The bank joined Citigroup, Credit Suisse and UBS in preparing to axe
thousands from its payroll, citing the economic downturn and a $50bn
merger with Merrill Lynch as reasons for the move. BoA, which is based
in Charlotte, North Carolina, declined to comment on how many jobs will
go at its British end, but Merrill has a significant presence in the
City including a plush headquarters opposite the London Stock Exchange. "The reductions are designed to eliminate redundancies created as a
result of the merger with Merrill Lynch and to reflect the current
recessionary environment," BoA said in a statement. The two banks have a combined workforce of 312,000. BoA has a
significant retail operation, with more than 6,000 branches, and has
247,000 employees. Last night's announcement will result in an 11% cut. Between 30,000 and 35,000 jobs will go from the joint workforce over the
next three years, and the bank expects to announce a final number early
next year. Cuts would be made in all parts of the business and as many
as possible by attrition, BoA said. It added that the business was doing well from a "flight to safety" by
depositors and investors as the credit crunch continues to buffet
banks.Despite this avowal that it is a healthier state than rivals, BoA
has had to tap the $700bn Troubled Asset Relief Programme set up the US
treasury to recapitalise banks' stricken balance sheets. So far it has
received $15bn from the Tarp and a further $10bn from investors. Merrill was forced to agree to a takeover by BoA in September as,
weighed down by sub-prime mortgage securities and risky debts, it
scrambled to avoid the same fate as Lehman Brothers, which went bankrupt
over the same weekend. BoA's use of Tarp money has added to pressure on Merrill to limit
executive bonuses. John Thain, Merrill's chief executive, waived his bonus for 2008 this
week as the New York attorney general, Andrew Cuomo, warned the Merrill
board he would not tolerate a multimillion-dollar bonus for the leader
of a bank whose new owner has been bailed out by federal funds.
According to reports last night, Cuomo is demanding other Merrill
executives hand back "guaranteed" bonus payments. BoA is not alone. Citigroup is cutting 75,000 jobs, or about 20% of its
workforce. Swiss Bank UBS is reportedly cutting around 4,500 jobs, and
Credit Suisse is axing 5,300 posts.
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