Earlier Monday morning, CEO Brian Moynihan said during an investor presentation at a Barclay's conference in New York that despite the bank's plans for cost cutting, it would continue to hire financial advisors "who work with our core preferred customer base." He also said that Bank of America's aggressive cost cutting plan would not require any major changes to the bank's business model because much of the savings will come from the full integration of six acquisitions made between 2003 and 2008. "We're not changing the comp plans of the wealth management team," he also said during the presentation.
Bank of America plans to cut annual costs of $5 billion out of baseline annual expenses of $27 billion by 2014 in certain business lines: consumer and small business banking, credit card, home loans, global tech and operations and their support areas. This is called "Phase 1" of the cost cutting plan. Moynihan could not quantify the cuts that will be made in "Phase 2," which covers $28 billion in annual costs, and applies to the bank's commercial banking, global wealth and investment management, global corporate banking, global markets and their support areas.
You can find a copy of the slide presentation Moynihan made while giving his talk here.
The text of the statement, which came out later in the morning, follows:
Bank of America’s Project New BAC is key to the company's strategy of focusing all of its resources on serving individuals, companies, and institutional investors.
The first result of New BAC was the recently announced management reorganization, removing a layer of management and streamlining the company by aligning its businesses with the customer groups.
This reorganization follows on work that started in January 2010. The company continues to sell non-core business units and assets that don’t support its strategy, thereby strengthening the balance sheet, and improving capital and liquidity.
Phase I nearing completion
Bank of America is nearing the end of the first phase of a comprehensive review of its consumer businesses and support functions. As the company implements the thousands of decisions from Project New BAC over time, it intends to become a more focused, leaner, and more efficient company, providing all of its customers and clients with the best financial services, generating strong revenues, carefully managing expenses and risks, and delivering long-term value for shareholders.
Bank of America's goal is not a given number of job reductions, but rather implementation of New BAC decisions. As the decisions are implemented, employment levels in the areas under review during Phase I are expected to be reduced by approximately 30,000 jobs over the next few years. The company expects that attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs.
Full implementation of approved ideas in Phase I is expected to lead to net expense reductions of $5 billion per year by 2014, on a baseline of $27 billion in annual expenses for the areas the company reviewed.
New BAC Phase II is scheduled to begin in October and continue through March 2012, and cover those businesses and operations that were not reviewed in Phase I.