Feb 16, 2023
Bank of America Plans Job Cuts in Its Investment Bank as Wall Street Retrenches
(Bloomberg) -- Bank of America Corp. is planning to cut jobs in its investment bank, one of the last major holdouts to bow to expense pressures that have left no one immune.
The number of reductions, which are still being discussed, could affect less than 200 bankers globally, according to people familiar with the matter. Still, the move goes beyond the pause in hiring the firm began earlier this year, and reflects a return to pre-pandemic levels of workforce trimming.
It’s a sign the finance industry will continue to lean on headcount reductions to contain costs prior to any meaningful rebound in dealmaking activity. Should stock sales and acquisitions remain muted, firms that had already reduced staff or kept firings to a minimum may need to explore additional cutbacks.
The size of job cuts have varied widely across the finance industry. Citigroup Inc. eliminated dozens of staffers across its investment-banking division in November. Morgan Stanley trimmed a far larger number of employees — 1,600 — in December, while Goldman Sachs Group Inc. embarked on one of its biggest rounds of reductions ever last month, cutting about 3,200 positions.
A representative for Charlotte, North Carolina-based Bank of America declined to comment.
There had been reluctance at Bank of America to carry out reductions, which were put on hold even as peers resumed cutting positions coming out of the pandemic. Across Wall Street, investment banks are wrestling with the decline in takeovers and stock and debt offerings that bring in advisement fees, as well as persistent inflation that’s boosting expenses.
Bank of America is expected to start its job-cut process in the coming weeks, but decisions are still being made, said the people, who asked not to be identified discussing a private matter.
Dealmaking remains muted following a dropoff in the fourth quarter, when Bank of America saw investment-banking revenue drop 54% to $1.09 billion. The biggest decline was in underwriting of equities deals, which fell 65% to $189 million, while debt underwriting slumped almost 58%.
Investment-banking revenue isn’t expected to rebound anytime soon. Analysts expect fee income to remain muted across four of the biggest Wall Street banks, and executives have issued warnings of their own. At JPMorgan Chase & Co., investment-banking revenue this quarter could be down 20% from last year’s $2.1 billion, Chief Financial Officer Jeremy Barnum said this week.
Bank of America is focused on bringing expenses down and headcount back in line with historic norms, a reversal from the hiring “engine” that was “cranking” during the earlier war for talent, Chief Executive Officer Brian Moynihan said this week at a financial conference hosted by the bank. Investments in digital platforms have helped keep headcount at the firm’s branches flat even as interactions with customers rise, he said.
The company added headcount in the fourth quarter even as net income fell to $27.5 billion in 2022 from a record $32 billion the prior year. Overall headcount at the bank jumped to 216,823 at the end of last year, up from 213,270 in the third quarter and 208,248 a year earlier, as hiring outpaced attrition.
BofA executives have attributed the workforce growth to ambitious hiring, with the company “overachieving” to “match the great resignation earlier,” Moynihan said on an earnings conference call last month. Still, the bank isn’t planning on “widespread job cuts” like some of its peers in an uncertain economic environment, Chief Financial Officer Alastair Borthwick said last month.
--With assistance from Dinesh Nair.
©2023 Bloomberg L.P.