Bank Of America Layoffs
August 19, 2011 by staff
Bank Of America Layoffs, Bank of America said it plans to eliminate another 3,500 jobs – on top of 2,500 already announced this year – as the banking giant continues to suffer from bad assets with too many mortgages on their books.
According to a report in the New York Times, more job cuts can be guaranteed, perhaps as many as 10,000 in total. Brian T. Moynihan, chief executive of the bank, said in a memo: “I know it’s hard to drive through reductions, but we owe it to our customers and our shareholders to remain competitive, efficient and carefully manage our expenses.”
Moynihan added optimistically: “Despite the market turmoil, always remember that we have the best franchise in the financial services sector and that we will overcome these challenges. Over time, the increase in net income and an increase in stock prices will surely follow. ”
Banks around the world have been cutting jobs to alleviate the costs amid falling revenues and falling stock prices.
Earlier this month, the British banking giant HSBC Holdings PLC said it would cut its worldwide workforce by 10 percent over the next two years, and you need to eliminate the costs and exit unprofitable lines of business.
As a result, more than 30,000 workers will eventually be dismissed.
HSBC’s decision to streamline your company followed similar steps by many major banks, including Swiss bank UBS AG icons and Credit Suisse Group, which also face increasing cost structures compared to revenue streams that fall.
In addition, Royal Bank of Scotland is trying to get rid of 2,000 employees, Barclays plans to leave an additional 3,000 and Lloyds Banking Group will cut 15,000, or 14 percent of its workforce.
So far this year, European and British banks have announced some 63,000-job losses.
“I think the layoffs in the banking sector reflect the new world that banks face as a result of the financial crisis and changes in national and international regulations subsequently precipitated the crisis,” said Sean M. Snaith, director of the Institute for Economic Competitiveness at the Faculty of Business Administration at the University of Central Florida.
“I’m not surprised to see more of this kind of dismissal and that banks should focus on the cost side of the equation of profit as the recovery and adaptation to new regulatory standards is limiting the growth of income,” said.
Alan Gayle, chief investment strategist for RidgeWorth Investments, said IB Times: “The banks and stock prices have been adjusted for loan losses, the demand for soft loans and more regulations. The layoffs are a sign that banks are taking initiatives to restore profitability in the long term. ”
Reduction in employment (which actually result in lower costs), usually benefit bank prices of capital.
Snaith said: “As incomes finally began to grow stronger, the new lower cost structure will mean higher profit rates and thus better performance in stock prices.”
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