Bank of America prepares to make investment banking job cuts

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Bank of America chairman and CEO Brian Moynihan.

Traders at Bank of America are in for an unsettling few weeks as their employer eyes a higher-than-usual number of job cuts at its capital markets and investment banking operations.

The US bank is set to become the latest on Wall Street to show people the door after several of its rivals set out plans to cut thousands of positions at financial centres worldwide.

The number of employees to go at Bank of America could not be determined on Friday but people familiar with the matter said it was likely to be higher than the 5 per cent who are typically axed each year in investment banking.

Competitors including Morgan Stanley and Credit Suisse have already laid down plans for cuts as pressures mount on trading businesses — particularly in fixed income, currencies and commodities.

First-quarter FICC revenues are set to drop by an average 15 per cent at Bank of America, Citigroup, JPMorgan and Morgan Stanley, analysts at Goldman Sachs estimated this week.

Structural challenges — tougher regulations and a shift toward electronic trading — have combined with a cyclical downturn as choppy financial markets have made clients less likely to trade.

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Bank of America, which is based in Charlotte, North Carolina, declined to comment on the planned cuts, which were reported earlier on Friday by Business Insider.

Brian Moynihan, chairman and chief executive, said at the World Economic Forum in Davos last month that further cuts across the bank were likely.

The lender has not set a cost-cutting target publicly, although it has committed to keeping annual expenses beneath $13bn while seeking to expand the business.

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More than 10,000 jobs went across all the bank's divisions last year, reducing the total headcount to about 213,000 at the end of the year. Bank of America does not disclose how many people work at its global banking and global markets business.

Last month, the bank published its biggest annual profit in nearly a decade as it seeks to draw a line under the financial crisis.

However, revenues fell and some analysts are concerned about the bank's ability to keep up the pace of cost-cutting, which has boosted its financial performance.

Revenue from FICC sales and trading fell 4 per cent last year to $8.7bn, the third successive annual decline.

Bank of America's shares have dropped by a quarter this year, making it the worst performing bank stock in the S&P 500.

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