Bank of America axe hovers over thousands of retail jobs

Alistair Gray
Bank of America slashing retail jobs

As many as 8,000 more jobs are set to go at Bank of America's consumer arm as the digital banking revolution gathers pace and reduces the need for back-office staff and bank tellers.

The biggest US retail bank by deposits also plans to add sales staff — including mortgage loan officers, small business bankers and personal investment advisers — as part of its efforts to improve revenues.

Even so, the overall headcount is expected to decline by several thousand as the number of consumers who visit branches falls steadily.

People with knowledge of the bank's plans said the reduction would come mostly from so-called attrition of back office employees — staff leaving and not being replaced — rather than lay-off programs.

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The biggest US retail bank by deposits has already slashed the headcount at its consumer division by almost 40,000 since 2009, bringing the total at the end of the first quarter of this year to 68,400.

Thong Nguyen, president of retail banking, told a conference in New York this week that the numbers would "probably go down to the low 60s."

That points to a reduction of as many as 8,400 from the first quarter figure, although this would still mark a slowdown of the pace of job reductions from the bank's post-crisis cost-cutting drive. Mr Nguyen did not provide a timeframe.

In the past seven years Bank of America's retail branch count has fallen by about 1,400, or almost a quarter, to 4,690.

At the same time it has expanded its online operations. Two weeks ago the number of its mobile banking users surpassed 20m.

Mr Nguyen said the bank was refurbishing branches as it sought to reflect a "completely different" function for the physical network. Consumers increasingly visit branches not for everyday transactions but mainly for more important tasks such as to apply for a mortgage, he said.

He noted that the bank was reinvesting the savings made from branch closures and staff reductions. "For three people that I'm taking out of the teller line, I'm going to reinvest two into the sales force," he said.

Bank of America's consumer powerhouse has 60m customers and accounts for just over half of the group's earnings and revenue.

The division's net income of $1.8bn in the first three months of the year was up more than a fifth from 2015, helping offset pressures on the investment bank.

Still, BofA's $134bn market capitalization is less than 60 per cent of its book value — a sign that investors are downbeat about the group's prospects.

Its shares are down 21 per cent this year, making them the worst performing in the KBW index of 24 US lenders.

Given its hefty domestic retail presence investors regard BofA as especially exposed to ultra-loose monetary policy, which squeezes the profit margin banks earn between the rates they offer borrowers and depositors.

"We're not waiting for the rates to come up to keep driving the increase in the profitability," Mr Nguyen added.