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According to an internal document distributed to top management, Bank of America (NYSE:BAC) plans to refocus its business strategy and cut costs, a proposal that would cut 16,000 jobs by December and end the company’s reign as U.S. banking’s largest employer.
Project New BAC, named for the bank’s ticker symbol, was designed to make the company take less risk, generate more revenue from its existing customers, and become a more powerful player in international investment banking, using the operation inherited from Merrill Lynch. To further lower costs, the bank will close 200 branches and shrink its mortgage operations.
By year’s end, Bank of America aims to decrease its workforce from the 290,000 employees the bank had when the project began, to 260,000. Cuts will primarily come from consumer-banking jobs, but the number of junior investment bankers has already been reduced by 23 percent. These cuts will make the bank’s workforce smaller than those of JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC).
Bank of America’s efforts to become a smaller and more efficient business come as Chief Executive Brian Moynihan tries to convince investors of the bank’s profitability in light of new regulations, an uneven economy, and shaky markets. Moynihan has pursued a different strategy than his predecessors since becoming CEO in 2010, eliminating the bank’s non-essential businesses and putting expansion on hold.
Under Moynihan’s leadership, Bank of America has dropped several international credit-card units, private-equity holdings, an insurance unit, and stakes in overseas banks. As a result, its total assets have decreased by 7 percent to $2.16 trillion. However, the bank has predicted that the two phases of Project New BAC will result in $8 billion in annual savings by 2015, and so far this year shares in the company are up 69 percent.
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