Bank of America is considering a plan to lay off up to 40,000 positions in the first phase of a massive global restructuring.
The Wall Street Journal said the numbers aren't final and any cuts would likely occur over several years. Bank of America announced in 2008 that it planned to cut up to 35,000 jobs over the next three years.
The planned job cull is far worse than the 3,500 layoffs that bank chief executive Brian Moynihan announced in August.
Some top managers, including Sallie Krawcheck, boss of the bank’s investment and wealth management units, and Joe Price, president of global consumer and small business banking, were already let go.
Major global banks have been jettisoning workers en masse for the past few months – the brutal manifestation of a grim new economic landscape.
On Thursday, HSBC Holdings PLC said it will eliminate 3,000 jobs at its Hong Kong headquarters over the next three years, in connection with a plan to cut costs.
Most of the job losses will occur in "support functions," according to Reuters.
"For all of HSBC's strengths as an organization... we can be needlessly complex and bureaucratic," said Peter Wong, HSBC's chief executive for Asia Pacific, in a memo obtained by Reuters.
The bank’s chief executive, Stuart Gulliver, warned in August that HSBC will cut up to 30,000 jobs around the world by 2013.
UBS AG, Royal Bank of Scotland, Credit Suisse Group, Barclays PLC, and Lloyds Banking Group, among others, have also announced large job cuts.
Peter Maris, principal and financial planner at Resource Financial Group Ltd. in Wilmette, Ill., said generally speaking the European and British banks are reeling from their heavy exposure to the euro zone debt crisis, particularly in Greece. Meantime, U.S. banks are trying to shake off the deleterious effects of the subprime mortgage debacle and housing collapse.
In the case of Bank of America, not only is it heavily exposed to the housing crisis -- it still has billions of dollars of bad mortgage debt on its books -- but it's also struggling to integrate some big acquisitions from recent years, notably Merrill Lynch and Countrywide Financial.
“Bank of America, like many other big banks are gradually going to shed the fat they acquired by getting involved in too many activities outside of their core business, which is lending,” said Maris. “They are starting to ‘un-diversify’ and streamline back to basics.”
As bad as this round of layoffs seems, it’s not nearly as bad as what bank employees witnessed during the credit crunch. Maris noted that the financial service industry in the U.S. underwent a 30 percent turnover in the latter half of the previous decade -- that figure also includes people who voluntarily left their jobs.
Maris said he expects the pace of bank layoffs to persist as more companies exit from nontraditional businesses. Once that process is completed, layoffs would likely ease in the event that banks loosen their purse-strings, start lending again and restore profit growth.
Palash has worked as a business journalist for 21 years in New York.