Bank of America, the nation's largest bank, plans to eliminate 3,500 jobs during the third quarter, part of a broader effort to cut costs at the bank, whose stock has fallen more than 50 percent since January. The bank has already cut 2,500 jobs this year.
CEO Brian Moynihan told the bank's senior leadership of the plan in a memo sent Thursday. The memo, obtained by several news outlets, suggests that 10,000 more layoffs could be announced next month.
“I know it is tough to have to manage through reductions," Moynihan wrote in the memo, according to The New York Times. “But we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully.”
According to the Times, Moynihan has pledged to trim quarterly expenses by $1.5 billion, and said in the memo that some of the 3,500 employees have already been notified that their jobs will be cut.
Two sources told Bloomberg that the investment-banking unit will lose 5 percent of its employees, about 600 people.
The Wall Street Journal reports that Bank of America has been under pressure from investors who worry the bank will have trouble meeting new global capital standards.
During the prior week's stock drop, Mr. Moynihan participated in a conference call with 6,000 investors hosted by billionaire investor Bruce Berkowitz, who invited all "skeptics" to join. During the call, Mr. Moynihan promised cost cuts and more noncore asset sales, but the company's shares kept falling. For the week ended Aug. 12, Bank of America shares tumbled 12%.
In his memo Thursday, Moynihan acknowledged "turbulence" but said the company will make it through the current challenges.
The Times adds that pressure has also come from investors "pressing the bank to buy back billions of dollars in securities it assembled from mortgages that later soured." In June, Bank of America agreed to pay $8.5 billion to investors including Pimco, BlackRock and the Federal Reserve Bank of New York to settle some of these claims. But since then insurance giant American International Group has filed a lawsuit against Bank of America.
"[I]nvestors fear the June settlement may actually spur more litigation, rather than resolve it," the Times reports.
The 6,000 cuts already announced this year represent 2 percent of Bank of America's approximately 287,000 workers, but the bank will remain the nation's largest bank employer, according to Bloomberg. Wells Fargo and Citigroup each employ over 260,000 people.