Bank of America Corp. officials have discussed eliminating roughly 40,000 positions during the first wave of a restructuring that Chief Executive Brian Moynihan is expected to discuss Monday, said people familiar with the plans.
The numbers aren't final and could change. The restructuring would reduce the bank's work force over a period of years. In fact, Moynihan may not discuss a job-cut number during next week's presentation at the Barclays Capital 2011 Global Financial Services Conference in New York.
He could choose instead to outline the bank's expected savings, after telling investors last month that he aims to reduce quarterly expenses by as much as $1.5 billion.
The planned personnel reductions at the largest U.S. lender by assets are part of an overhaul known as "Project New BAC," after the Charlotte, N.C., bank's ticker symbol. The 51-year-old Moynihan is trying to bolster profits amid concerns about Bank of America's exposure to the slowing U.S. economy and a slew of mortgage-related losses and lawsuits.
The bank has made several moves in the last month to solidify its finances and focus its operations. Moynihan ousted two high-ranking lieutenants this week and installed two others as co-chief operating officer. The bank sold $5 billion of preferred stock to Warren Buffett's Berkshire Hathaway Inc. and agreed to sell half its stake in a Chinese lender. It also is trying to sell a large piece of its mortgage business.
With Project New BAC, the bank hopes to make a strong statement to Wall Street about its commitment to getting leaner, these people said. Rivals such as J.P. Morgan Chase & Co., the second-largest lender in the U.S., operate with far fewer people.
Executives met Thursday in Charlotte and will gather again Friday to make final decisions on the reductions, putting the finishing touches on five months of work. Some jobs could be eliminated through attrition or hiring slowdowns; the bank also expects to save money through a reduction in redundant systems inherited from prior acquisitions. Implementation could take three years.
By late August, officials involved in project new BAC had narrowed the range of cuts in the first phase to 40,000-45,000, said one person familiar with the discussions. Those reductions would fall largely on the consumer half of the bank. The bank's top executives also discussed plans for roughly 40,000 cuts last month, said another person familiar with the situation A third person said the precise amount of the reductions won't be known until all of the changes are made, but is likely to fall within a range of 30,000 to 40,000.
There are roughly 160,000 positions in the bank's consumer-related businesses, said people familiar with the situation.
Earlier, bank officials had discussed a plan that involved more than 50,000 job cuts, but that figure was pared back, one of these people said.
The cutbacks come on top of 6,000 jobs already eliminated this year by the bank, including some in investment banking and trading. The bank employed 288,000 workers as of June 30.
Last spring, Moynihan assigned 44 Bank of America executives to begin a review of the consumer side of the bank, as well as legal, marketing and human resources. More than 150,000 "ideas" were examined in the first phase, the company said in a memo distributed to employees last Sunday.
The second phase of Project New BAC is expected to begin in October and focus on the bank's commercial units: investment banking, trading, wealth management and corporate banking. More cuts are expected in that second wave.
"I recognize this magnitude of change can be unsettling," Moynihan said in a memo distributed to employees on Sept. 1. "We will make our decisions carefully and thoughtfully."
Mike Lyons, an adviser to Moynihan who serves as global corporate-strategy planning and development executive, said in the same memo that the ideas emerging during the five-month review "tighten our expenses with our financial plan" and "make us a more contemporary, competitive company. This is exactly what we need to get out of this project."
If the bank sticks with 40,000 job eliminations in the first wave of restructuring, the belt tightening would go well beyond the pruning of work forces at other financial firms. HSBC Holdings PLC, for example, plans to cut about 30,000 jobs world-wide by the end of 2013.
It also would exceed Bank of America's last big cutback, a 2008 revamp that called for 30,000 to 35,000 job cuts over three years. That move was triggered by an economic slowdown and the planned takeover of securities firm Merrill Lynch & Co.
Many of the biggest U.S. banks are expected to pare head counts this fall. They have come under pressure from investors to control expenses with revenue weak and the economy softening. Bank of America's noninterest expense, which includes employment, was up 32% from a year ago in the second quarter, to $22.9 billion.
Bank of America has taken other steps this year to cut back. It shed 63 unprofitable branches in the second quarter and intends to close 750 of its roughly 5,700 branches in the next few years.
This story first appeared on WSJ.com.