Chillin' out till it needs to be funded
In a whirlwind of media confusion, Bank of America added a further 3500 job cuts to its large army of bankers yesterday,. However half the early media reports on the news assumed it to be part of its overall Headquarters’ run central program called the “Project new BAC” “Project New BAC” has been enlisted with an objective of $1.5 bln in savings to be delivered every quarter for the next 6-8 quarters
Bank of America’s noninterest expense of $22.9 billion in the second quarter was up 32% from a year earlier. The figure includes employment, occupancy, marketing and other business costs.(WSJ)
The bank also has a viral video going around of it helping Gov Rick Perry as the Republican candidate for 2012 Presidential elections. The BofA spokesman confirmed that was about helping Rick Perry with his agenda for job creation and employment
Assuming each front office job costs $35000 in salaries and $350000 in overheads plus the rest in other deferred costs a maximum of $500k or $175 million per quarter can be attributed to 1 lost headcount and only $125000 per quarter. However fromt he banks recent non interest expenses figures allocated to all 400k employees, the number stays at $500k per quarter. per 1000 jobs, the the other savings are just fixed costs which are saved just once. The bandied 10,000 job cuts number could be true else the bank would be cutting 3500 jobs every quarter for 2-3 years and there is absolutely no way they would be excused for doing it more than once now.
The 3500 jobs now will be in trading , investment banking and retail. The bank is planning a 10000 job cuts or 3.5% of its workforce
in 2011, banks are planning cuts of 100k jobs of which BofA has announced only 1575 jobs till last week. While banks are already hiring internationally, because of its public stake, BofA is actually selling off its international businesses, the last one being the Credit cards MBNA business to TD group .
A 20% cut in retail
Project new BAC will be focussing on deposits, cards and mortgage units to deliver reductions of up to 20% in expenses The review at Corporate and Investment Banks will come after the Project New BAC is reviewed in September and job cuts in retail and support completed.