Occupy Wall Street protests are the least of Bank of America's problems. The bank is starting to lay off its more profitable employees.
On Tuesday, the Wall Street Journal reported that Bank of America, the nation's second largest bank by assets, plans to lay off 2,000 staffers in investment banking, commercial banking and foreign wealth management. The layoffs are significant, the WSJ writes, because: "of whom they target: the high-earning employees whose efforts helped Merrill Lynch account for the bulk of Bank of America's profit since the financial crisis."
The planned layoffs come after the bank's announcement last fall that it would cut 30,000 jobs: mostly less well-paid positions in consumer banking.
The layoffs are meant to signal that Bank of America will slash its expenses enough to bring them in line enough with lower revenue, according to the WSJ. Bank of America has seen its revenue plunge 22 percent between 2009 and 2011 (while total employee pay rose 17 percent) due in part to fewer mergers and acquisitions as economic growth stays sluggish and new financial regulations prevent more lucrative risk-taking. The bank's expensive acquisition of Countrywide also left it saddled with toxic mortgages, according to the WSJ.
Bank of America needs to reassure its investors any way it can. Its stock price has plunged 54 percent over the past two years, according to Google Finance.
Bank of America apparently first tried to cut pay for its investment bankers before pursuing layoffs. In January, Bank of America cut pay 25 percent and froze base salary levels and capped cash bonuses at $150,000 for some investment bankers as part of an effort to slash expenses by a total $6 billion to $8 billion per year, according to Bloomberg News.
Bank of America is one of many banks cutting staff. Wall Street is planning to slash up to 21,000 jobs soon, Fortune Magazine reports. The financial industry already has shed 459,400 financial industry jobs over the past four years, according to an analysis of Labor Department data by the Business Journals.
The Morning Email helps you start your workday with everything you need to know: breaking news, entertainment and a dash of fun. Learn more