While eating lunch, I was staring at an article in the LA Times titled “Bank of America speeds up branch closures, 16,000 job cuts“. I’m thinking this is big news, and I’m wondering how it will be spun. Then I start to read the article closer, and notice little things:
Chief Executive Brian Moynihan, in his attempts to make the company more focused and profitable after its disastrous 2008 takeover of mortgage giant Countrywide Financial Corp….
The focus here is increasing corporate profit, probably back to what is the shareholder expected high levels they have been. This is a reminder of where the money goes in banking operations: to profits and shareholders.
Through the end of the second quarter, that means a 23% downgrade in the number of junior investment bankers compared to September 2011, according to the document.
This really caught my eye. Why the junior investment bankers? Seniors earn more and get larger bonuses. Why aren’t seniors being cut? Could it be a difference in fixed costs per employee (benefits)? Also what would result in a loss of investment banking business? This all could be a side effect of the economy meaning that fewer people have money to invest.
In the consumer banking department, 5,300 workers will go; 3,200 employees overseeing new mortgages will be cut.
When you aren’t aggressively pushing bad mortgages, you have less of a need for people to process them. Banks are still reluctant to support re-fis.
The unit handling troubled loans had 55,000 workers by mid-2012, but will be reduced to 50,000 later this year, according to the document. The number of employees in the global wealth and investment management sector will stay steady.
As you clear out the bad loans, you need fewer employees. I’m curious how global wealth and investment management is staying steady when investment bankers are being cut.
Bank of America shut down 178 branches last year and will close an additional 200 this year, according to the document.
So B of A will be providing less personal service to the remaining customers they do have.
Interesting what you can see when you look closely.