Bank of America and Merrill Job Cuts Could Now Reach 30,000

CNBC
BofA and Merrill Job Cuts Could Now Reach 30,000
By Charlie Gasparino, On-Air Editor | 02 Dec 2008 | 04:27 PM ET

Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill Lynch, three times as many as previously estimated, sources told CNBC.

As of yesterday, sources were saying that layoffs could total at least 10,000 and would start before the end of the year.

But Bank of America CEO Kenneth Lewis wants to wring out $7 billion in savings from the merger over the next few years, so the total number of jobs lost could be closer to 30,000, they said.

Some of these job cuts could be through attrition or the sale of some businesses. But the heaviest cuts will probably come in the investment banking business, which has dried up during the current credit crisis.

Combined, Bank of America and Merrill would have 260,000 employees. About 50,000 are in the banks' investment banking operations. The majority of the layoffs are likely to come from Merrill's side of the business.

The move comes amid very tough times for the banking sector. With the declining market and tight credit picture, profits are under intense pressure. And traditional work in the initial public offerings and mergers and acquisitions business has dried up.

Bank of America, the country's largest mortgage lender and one of the biggest credit card issuers, cut its dividend in half in October after rising credit losses contributed to a 68 percent decline in third-quarter profit.

The bank has already raised more than $22 billion in capital this year and is getting $25 billion from the $700 federal bailout program.

—Reuters contributed to this report.

© 2008 CNBC.com