Bank of America, which in recent years has slashed more staff than many of its peers, is nearing an employment milestone: It might soon have fewer workers than it did before its last two major acquisitions.
The Charlotte bank reported having 213,000 employees worldwide at the end of last year, only 6,000 more than it had in June 2008. That was shortly before it added tens of thousands of workers by buying Countrywide Financial that same year and Merrill Lynch in 2009.
Under CEO Brian Moynihan, who took over in 2010, the bank has trimmed roughly one-quarter of its workforce, partly through attrition.
Last year alone, the bank cut more than 10,000 jobs. More job cuts are expected, as Moynihan focuses on reducing expenses and improving efficiencies.
In Charlotte, Bank of America has cut hundreds of jobs in recent years across a broad swath of areas – from its corporate real estate group and technology and operations unit, to its division that handles troubled mortgages.
Despite the cuts, Bank of America executives say the bank remains committed to its home city, and that its local workforce has stood at about 15,000 for a decade. They point to Charlotte’s function as its headquarters as a major driver of the bank’s relative employment stability here.
Charles Bowman, the bank’s Charlotte market president, said the city serves as the base for some of the top executives in finance, risk, legal, compliance, human resources and global technology and operations. All told, the bank has roughly 1,200 “senior leaders” in Charlotte, he said.
“When you think about the functions that are here, there are a lot of senior people,” Bowman said in an interview.
Anxiety persists in Charlotte, though, after years of cuts. Last month, the bank said it is eliminating a “small number” of marketing and communications jobs in Charlotte and elsewhere.
“You’re ready for any moment or any (time) of year to be laid off,” said one Bank of America employee who works in Charlotte but asked not to be named. “It happens every year. It never goes away.”
The largest U.S. banks have been cutting jobs as they grapple with low interest rates that crimp their profitability. This year, falling oil prices and slowing growth in China pose fresh worries.
Across Bank of America’s U.S. operations, analysts say areas likely to see future job cuts include its branch network as the bank continues shedding branches, and the troubled-mortgage unit as it handles fewer problem loans.
Moynihan, who has guided Bank of America through a tangle of post-financial crisis legal problems, is now under pressure to show he can grow earnings – which could help position the bank to raise its quarterly dividend beyond the current 5 cents a share.
“He’s under pressure to get the earnings up so he can raise the dividend in a material way,” said independent banking analyst Nancy Bush.
Moynihan told Bloomberg Television in January that the bank will improve its profitability by continuing to lower costs and growing sources of revenue. But he also said the bank’s workforce will continue to shrink, declining to speculate when asked whether it could dip below 200,000.
“It will be lower than it is now,” Moynihan said.
Advances in banking technology have contributed to Bank of America’s lower employment, Moynihan said, as more jobs are automated. The rising popularity of mobile banking, for example, has driven banks to eliminate employees who processed transactions in branches.
He said the bank has cut expenses and jobs for roughly 25 quarters. But the bank has added people in other areas, such as sales, to keep it competitive, he said.
Beginning in 2011, Moynihan targeted thousands of jobs for elimination under a cost-cutting program named Project New BAC, after the bank’s ticker symbol. In 2014, Bank of America announced it had reached the project’s goals, but it has continued looking for ways to wring expenses from the company.
An initiative called Simplify and Improve is aimed at reducing complexity and simplifying processes.
“We need to continue to simplify the company, not only the products that we serve customers with, but also how we interact so that it just takes less friction to get work done, eliminate bureaucracy where you can,” said Bowman, the Charlotte market president.
“That’s sort of a cultural way of life that we’re really trying to instill here,” Bowman said. “Just make it easier to do business with us and make it easier for people within the company to transact with each other.”
73,900 jobs gone
Over Moynihan’s tenure, more than 73,900 jobs have been eliminated, an about-face for a bank whose employment expanded as it ballooned into a nationwide giant through years of acquisitions.
Of the four largest U.S. commercial banks by assets, only New York-based Citigroup has shed more jobs, 144,000, since the recession, as it has sought to lower expenses.
As recently as 2011, Bank of America was the largest U.S. bank by employment compared with its three largest competitors. It now ranks third, behind Wells Fargo and Citigroup.
Employment at Wells Fargo is up about 66 percent since the start of the recession, largely because it bought Charlotte’s ailing Wachovia in 2008. Wells, based in San Francisco, employs about 265,000, according to its most recent earnings report.
Employment is up about 30 percent at New York-based JPMorgan Chase & Co., which in 2008 bought Bear Stearns and Washington Mutual as those companies teetered.
Much of the job cuts under Moynihan have affected a unit established in 2011 to deal with soured mortgages, many of which it inherited from Countrywide.
Also under Moynihan, the bank has sold off billions of dollars in investment stakes and businesses, such as an appraisal operation it acquired from Countrywide.
The bank has also lowered costs through reducing its real estate footprint and other means. But its workforce has continued to be a prime target for expense-cutting.
“The head count will come down because we’re 60 percent people costs,” Moynihan said in October. “There’s not enough other costs to save a lot of money.”
Charlotte steady at 15,000
Bank of America executives in Charlotte say the company has added positions in the city at the same time it has made other cuts, such as 540 layoffs in 2014 in the unit for troubled mortgages.
Some laid-off employees have found other positions within the bank in Charlotte, which has also contributed to the stability of its local employment figure, according to the bank.
Andrea Smith, the bank’s Charlotte-based chief administrative officer, notes that as the company’s workforce has fallen, Charlotte has come to represent a relatively larger percentage of its overall employment.
“We have maintained a team of 15,000 or more in our Charlotte headquarters for 10 years, which makes sense since it is our headquarters and our team here is comprised of every line of business and all staff functions,” she said in a statement.
Bowman said Bank of America’s turnover rate in Charlotte is about 8 percent, compared with roughly 12 percent for the company as a whole. Those rates are “pretty healthy,” he said.
In addition, the company’s employee satisfaction scores, which suffered in the depths of the financial crisis, have since recovered, Bowman said.
Some of the bank’s employees in Charlotte say they are frustrated after seeing six straight years of reductions.
“They are getting rid of very talented people,” said another Charlotte employee who asked not be named. “We’re not getting new bodies in.”
Layoffs have seemed to become the norm at the bank, the employee said: “People are under the impression it’s just the way it is now.”
What lies ahead
Banking analyst Mike Mayo says three areas within Bank of America are most likely to see job cuts.
“If you say, ‘Who’s at risk?’ (It’s) branch tellers, lower-performing wealth managers and lower-performing fixed-income traders. I think that’s across the industry, but it certainly applies to Bank of America as much as anyone,” said Mayo, a frequent critic of the bank.
Investors will be watching, as they seek profit growth. Bank of America’s peers are outperforming it on some profitability measures.
For one metric, return on assets, the bank has set a long-term goal of 1 percent, which it says it will hit if annual earnings grow $4 billion. Last year, the bank earned $15.89 billion, as its legal costs tied to the financial crisis tumbled, loans and deposits rose, and expense cuts continued.
Cutting jobs is “not pleasant,” Moynihan said. “But we use attrition. We just keep driving it down.”