Tuesday’s Headlines: BofA Cuts High Earners, Creates Program for Junior Staff
Here we go. Bank of America is planning to slash about 2,000 positions in its investment banking, commercial banking and non-U.S. wealth-management units, according to a Wall Street Journal story today. This is an especially big deal because these cuts come on top of the announcement to cut 30,000 consumer banking employees over three years, as announced last year. The layoffs will also focus on high earners – the very people who helped the bank profit in the past few difficult years. But it seems the bank has to do what it has to do. The paper points out: “Personnel expense at Bank of America rose 17% between 2009 and 2011—a period in which revenue dropped 22%.” The story continues:
The No. 2 U.S. bank by assets already is facing a wave of high-profile defections in its institutional businesses, such as investment banking, amid Wall Street's annual post-bonus job-hopping season. The upheaval comes as investors are pressuring banks to rein in expenses without giving ground competitively. Despite a 46% rise this year, Bank of America shares have lost a third of their value in the past year, amid questions about the industry's profit outlook.
Bank of America employed 278,700 people as of March 31st.
On the bright side, the bank will hold back cuts in growing units including fixed income. Also, the bank is creating a pool of junior bankers that will be routed to whichever departments are in need of help.
Elite colleges still feed Wall Street’s recruiting machine. [NY Times]
Thirty-seven percent of private equity firms are hiring. [Fortune]
N.Y. law firm Dewey & LeBoeuf encouraged its partners to leave. [DealBook]
Man Group reports $1 billion of client outflows. [DealBook]
The Maple Group consortium reiterated its $3.85 billion offer for the Toronto Stock Exchange and announced acquisitions of Alpha Trading Systems—Canada's second biggest stock trading venue—and the Canadian Depository for Securities clearing system. [Reuters]
Six top RIAs formed an anti-roll-up advocacy group. [Investment News]
A series of events are planned today for Occupy Wall Street. [CNN Money]
Big banks are pressuring Washington to level the playing field with smaller rivals. [Financial Times]