New York - AFP
Bank of America said on Monday it would cut around 30,000 jobs as part of a sweeping plan to slash $5 billion in costs and restore investor confidence in the beleaguered US banking giant. The job cuts, which represent just over 10 percent of BofA\'s workforce, will be carried out \"over the next few years\", the bank said in a statement. Notably, the announcement came the same morning that US President Barack Obama demanded that Congress pass his $447 billion jobs bill, aimed at reducing the country\'s stubbornly high 9.1 percent unemployment rate. The elimination of 30,000 jobs at Bank of America was the largest layoff announcement by a US employer this year, according to Challenger, Gray & Christmas, a consultancy that tracks the US labor market. Bank of America said the layoffs would help it cut $5 billion in annual expenses by 2014 as part of \"Project New BAC\", named after the company\'s three-letter stock ticker. The savings represent more than 18 percent of Bank of America\'s current annual costs. \"As the company implements the thousands of decisions from Project New BAC over time, it intends to become a more focused, leaner, and more efficient company,\" the bank said. Investors appeared to welcome the restructuring plan, with Bank of America\'s shares gaining 1.0 percent for the day. Still, the bank\'s share price is down more than 47 percent since the beginning of this year. BofA\'s stock has plunged amid concerns over the strength of its capital base and fears of huge expenses from its disastrous involvement with subprime mortgages prior to the 2008 financial crisis. \"The environment will continue to be difficult,\" BofA\'s chief executive Brian Moynihan said on Monday at a closely watched address in which he announced details of the restructuring plan. \"We can continue to bring the costs down,\" Moynihan said at a finance conference in New York organized by Barclays. The $5 billion in annual savings will come from improving the efficiency of the bank\'s consumer and small-business operations and merging various back-office functions, Bank of America said. They will be followed by a second phase of cost-cutting that will target the bank\'s corporate banking and global markets businesses, it said. Bank of America, the largest US bank in terms of assets and deposits, has taken dramatic measures in the past several weeks to stave off the collapse of its share price. Last week, Moynihan announced a reshuffle of the bank\'s management team that included the ouster of two top executives. In late August, BofA received a $5 billion investment from billionaire Warren Buffett\'s Berkshire Hathaway, and also announced that it was selling half its stake in China Construction Bank for approximately $8.3 billion in cash. The sale of the CCB stake fit with a broader strategy, pursued by Moynihan, of divesting non-core assets scattered around the world in order to allow BofA to refocus on its core business. BofA also sold off its Canadian credit-card unit in August and said it would exit the credit-card business in Britain and Ireland. Bank of America posted a $9.1 billion loss in the second quarter, mostly due to an $8.5 billion settlement to resolve claims stemming from its issuance of mortgage-backed securities that went bad during the financial crisis. The bank continues to be weighed down by its 2008 acquisition of Countrywide Financial, a mortgage firm whose dubious lending practices have brought Bank of America numerous lawsuits and huge legal costs.