BofA to cut 30,000 jobs as US economy falters

Bank of America, the biggest US bank by assets, this week said it would slash 30,000 jobs and $5bn in annual expenses as the lender tries to regain investor confidence amid mounting mortgage-related expenses and a faltering US economy.

The cuts are the first step in a two-phase approach to streamline the bank and make it simpler. The job cuts amount to nearly 10 per cent of its global workforce. It was the year’s largest workforce reduction announcement by a US company, according to Challenger, Gray & Christmas, the outplacement group.

Analyst opinion was mixed. Many said it was a step in the right direction. After taking a scalpel to its consumer-oriented businesses, the company will now turn its attention to $28bn in expenses in its commercial and investment arms. Still, several analysts reduced their price targets for the company’s shares.

Investors barely blinked. BofA’s shares closed the day up just 1 per cent, before dropping nearly the same amount on Tuesday. They have dropped nearly 50 per cent so far this year, about twice as much as the KBW Bank index, which tracks large US lenders.

However, BofA faces an avalanche of litigation related to its 2008 purchase of Countrywide Financial, the mortgage lender.

State attorneys-general, federal regulators, insurance group American International Group and aggrieved investors in its mortgage-linked securities are just some of the parties lining up to make the bank pay for past mistakes.