CHARLOTTE - Bank of America Corp. has recently cultivated an image of customer-friendly service, free checking, and speedy loan processing, but as it also tries to cut costs and improve efficiency, it is becoming known for something else: layoffs.
The nation's largest consumer banking company announced plans Thursday to eliminate 4,500 more jobs nationwide, or about 2.5% of its 178,000 employees. It said the cuts - mainly among back-office and support personnel - would bring $150 million of severance costs for the third and fourth quarters of this year and the first quarter of next year.
The cuts are in addition to 12,500 positions, or 7% of its staff, that B of A expects to cut as part of its integration of FleetBoston Financial Corp., which it bought April 1. Alexandra Trower, a B of A spokeswoman, would not say how much it would save as a result of the new cuts. It has said it expects to save up to $1.375 billion a year as a result of the Fleet integration by 2006.
Thursday's announcement fit the pattern of downsizing that has developed under the Charlotte company's chief executive, Kenneth D. Lewis, in recent years, even in the absence of acquisitions. His strategy has included layoffs, divestitures, and outsourcing deals and is designed to keep the $1 trillion-asset company lean and profitable. It now ranks as one of the world's most profitable companies - last year Fleet and B of A reported $11 billion of combined earnings.
Since taking the helm at B of A in April 2001, Mr. Lewis has pushed his company to improve service and cut costs, in part by applying Six Sigma analytical techniques across the company.
In 2002 and early 2003, B of A eliminated 10,343 jobs, or 7% of its work force. Those cuts followed an earlier round of 10,000 cuts announced in July 2000. Those layoffs were on top of thousands of job cuts following the 1998 purchase of BankAmerica Corp. of San Francisco by NationsBank Corp. of Charlotte.
This time around, B of A said, it would reinvest the savings in areas where it sees the best growth opportunities. This week it announced plans to spend more than $600 million to expand its global corporate and investment banking division. On Thursday it said it plans to hire more salespeople in its wealth and investment management group and to boost investments in consumer and small-business banking.
Thomas McCandless, an analyst at Deutsche Bank Securities, said Mr. Lewis is clearly looking for ways to invest more in his existing businesses without cutting into profits. "I think a company of their size has got a laundry list of things they'd like to build out, and there's not enough money to do it."
The company has wrestled with problems on a few fronts, such as last year's mutual fund trading investigation, and it continues to deal with a probe into its dealings with the failed Italian food manufacturer Parmalat Finanziaria SpA, which blames B of A for contributing to its collapse.
B of A would not make executives available to discuss Thursday's announcement. But Ms. Trower said the cuts announced Thursday are related both to a management reorganization announced last month and to a companywide reexamination of expenses.
"We've done two things," she said. "We've integrated the company as a result of the merger, and we have simplified our business model so that we can operate more effectively."
In late August, B of A announced the departure of Brad Warner, a former Fleet executive, as the head of premiere and small-business banking. It consolidated its consumer banking, consumer products, and small-business banking operations into one unit. And it shifted premiere banking, which serves midlevel wealthy customers, into its wealth management group
Those moves will allow B of A to eliminate duplicate administrative functions in premiere and small-business banking, Ms. Trower said.
Some cuts also will come in business lines where revenue is declining, such as mortgages. For example, the 4,500 cuts announced Thursday include about 500 layoffs announced in June at mortgage processing centers nationwide, she said.
Since acquiring Fleet, B of A has eliminated at least 4,000 jobs. That included 800 layoffs in August at Fleet's 1,500 branches in the Northeast and hundreds of cuts at Fleet's headquarters and other Massachusetts locations.
Those cuts rankled public officials and prompted a new pledge by B of A last month to make Boston the headquarters for its wealth management unit by moving 100 executives there from around the country.
On Thursday, B of A said the latest reductions would not affect its employment commitments in New England.
Jeffery Harte, an analyst with Sandler O'Neill & Partners LP, said the layoff news from B of A "bolsters our belief that management will have little difficulty in delivering expected cost saves from the merger with FleetBoston."
However, both Mr. Harte and Mr. McCandless expressed concern that B of A could face slower revenue growth next year.
"It's conceivable that they're contemplating a tougher revenue environment and that some of the savings will fall to the bottom line to offset tougher revenue growth," Mr. McCandless said.
