Bank of America Corp., the second-biggest U.S. lender by assets, may reduce annual costs by as much as an additional $3 billion in the next stage of CEO Brian Moynihan’s efficiency plan.
The lender, which already targeted $5 billion in expense cuts from retail and back-office operations, may reach total savings of $6 billion to $8 billion a year, Moynihan said during an employee meeting on Thursday.
The latest phase of his effort examines investment and commercial banking, trading and wealth-management units, which have a presence in Charlotte, and is scheduled to be completed in April.
Moynihan, 52, is relying on cuts after mortgage losses and U.S. regulation drained revenue last year. In the first part of his plan, dubbed Project New BAC, the CEO announced 30,000 job cuts from consumer banking, credit-card, home loan and support operations at the Charlotte-based lender.
Managers will reduce the “overall cost structure of the company; through New BAC we’ve identified $5 billion,” Moynihan said last week. “We’ll pick up more in Phase 2 – that ought to get you $1.5 billion to $2 billion a quarter” in total savings.
Moynihan has told analysts that his latest round of cost cuts will yield smaller savings than the first because there are fewer employees in corporate and institutional units. Expenses will start to decline in the second half of this year, he has said. Larry DiRita, a spokesman for the bank, declined to comment on Moynihan’s remarks to employees.
The push to reduce costs has stoked anxiety among the 284,635 workers the lender had as of Dec. 31. The bank has said it has about 15,000 employees in Charlotte. Moynihan in September unveiled initial details of his plan, which divides the company into two parts, each with roughly $27 billion in annual expenses.
Bank of America advanced 18 cents Monday to close at $7.25. The firm has surged 30 percent this year, the most in the Dow Jones Industrial Average, as investors bet that an improving U.S. economy will buoy earnings. The lender was pummeled last year with a 58 percent decline, the worst in the 30-company Dow index.
“Happy New Year,” Moynihan said during the Jan. 19 employee meeting. “It’s a happier New Year today with the stock price up a little bit, right?”
Copyright 2012 . All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
NEW YORK –