The Banking and Strategy Initiative

Chillin' out till it needs to be funded

"Nineties Envy":Bank of America matches GS in savings war

Merrill Lynch & Co.

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Even as Raymond James gets a juicy bit of Morgan Keenan to buy, pay cuts and job cuts in the Investment Banking divisions reached a final climax with Bank of America’s purchase of Merrill Lynch coming through with cutdowns of MD count by 20% in its investment banking division. AT avaerage 2009 bonuses that could mean a $1 bln in salaries and bonuses. The current requirement is to lay off 15 of its MDs in the Asia Pacific Mike Cho as head leaves while co-head Zhang Xiuping from DB (2010 hire) stays in charge to bring business from China

Ofcourse, without a pyramid in the organisational heirarchy setting any ratios for associates to Managing Directors, this will not entail job cuts at associate levels who go for a 20-40% pay cut int he industry and bonuses near the ‘0’ prefered by Goldman Sachs


Drowning in new legal costs and provisions

Keefe Bruyette and Woods factored in additional $1 bln in mortgage settlement costs (legal) in their latest fourth quarter estimates heralding a 3 cents loss for the bank despite cost savings initiaties under Project new BAC. A Citigroup report pointed out that the bank will be increasing its mortgage loan loss reserves to $67 bln from a massive $35 bln reached in Q1/Q2 of 2011. New provision sof $32 bln could well count to a $3 loss additional to current estimates but likely an adiditional $12 bln in reserves for $ 1.20 in losses on the count of reserves. FHFA settlements could cost between $6 – 9 bln according to a Credit Suisse assessment. The bank has pared down its exposure to Europe over 2011, but only for PIIGS exposure as the Euro hits buy lists with Jim Rogers based on the depth of the correction. We assessed a bottom of $1.19 to be the toughest test for the currency mid-year





The Green Investment Bank

Image by Cabinet Office via Flickr

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