Anyone curious about the health of the financial services industry got a look this afternoon.
Bank of America (BAC) will cut 35,000 jobs over the next three years.
According to the company,"The reductions are coming from both companies and affect all lines of business and staff units."
B of A is not even certain where the cuts will come, which makes the announcement something of a puzzle. The firm says it has overlap from the Merrill Lynch (MER) purchase and knows it is facing an extremely tough economy.
The press release says,"While both factors will result in the elimination of positions, the company has not completed its analysis. Bank of America expects to have a final plan early in 2009 and estimates it will project the reduction of approximately 30,000 to 35,000 positions over the next three years. A final number will not be determined until early 2009."
One theory about making the disclosure at this point when the bank itself is not sure of the details is that Wall St. is still concerned about whether all of the large money center banks will make it. Many analysts think there are still tens of billions of dollars in losses coming from credit cards, auto loans, LBOs, and further write-downs in derivatives tied to housing and consumer credit. Bank of America may want to give the appearance the it is getting out in front of those problems by chopping heads.
Investor concerns about the viability of BAC are fairly clear. Its shares are down 50% in the last 90 days. The stock now trades at just under $15, down almost as much as Citigroup (C) over the last three months but much more than Wells Fargo (WFC) and JP Morgan (JPM).
BAC needs to convince Wall St. that it is one of the large financials which is going to survive.
Douglas A. McIntyre