NEW YORK — Bank of America Corp. cut jobs Wednesday across co-Chief Operating Officer Thomas Montag’s global trading and investment banking divisions, according to three people with direct knowledge of the decision.
The dismissals at the second-biggest U.S. bank will affect fewer than 5 percent of employees in the units, said one of the people, who requested anonymity because the moves haven’t been made public. Volunteers were sought to accept job cuts, the people said. Kerrie McHugh, a spokeswoman for Charlotte, N.C.-based Bank of America, said the company had no comment.
Banks have been cutting workers for the past five years and still haven’t settled on the right workforce size amid stagnant revenue and tougher regulation. JPMorgan Chase and Citigroup warned investors that trading revenue so far in the first quarter, when firms typically earn the most from that business, was down about 15 percent.
“Wall Street may be in the seventh inning of what it is going to be post-crisis,” said Richard Lipstein, managing director of New York-based recruiting firm Gilbert Tweed International. “This is an ongoing process that occasionally results in a material number of layoffs. In fixed income, they’re looking at a shrinking business and figuring out how to match expenses and headcount with revenue.”
The banks are pruning employees and making selective hires this month in hopes of improving profits. Revenue from trading and investment banking at the nine biggest global firms fell 4 percent to $160 billion in 2013, as weakness in fixed-income outweighed gains in equity trading and fees from advising and underwriting.
More job cuts may be coming this year at lenders including Frankfurt-based Deutsche Bank, Germany’s biggest, and Barclays, Britain’s second-largest.
Deutsche Bank is weighing reductions in coming months, on top of 2,000 announced in 2012, across corporate finance, capital markets and trading businesses, said two people with knowledge of that bank’s plans. The cuts are partly a result of the company’s decision to increase base pay for senior bankers as European Union curbs on variable compensation kick in, boosting fixed costs, the people said.
Barclays is planning an overhaul of the investment bank, including staff reductions and exiting some unprofitable businesses this year, a person with knowledge of the matter said last week. The London-based firm outlined plans in February to eliminate 12,000 jobs to curb costs after fourth-quarter profit declined.
Financial firms worldwide announced plans to cut a total of more than 317,000 jobs over the past two years, data compiled by Bloomberg show.
Wall Street’s clients are trading less as the Federal Reserve slows its monthly asset purchases and leaves bond investors preparing for rising interest rates. An index of global equities tumbled earlier this month, erasing the year’s gain, as Russia’s growing military presence in Ukraine prompted an emerging-market sell-off.
Citigroup finance chief John Gerspach said on March 3 that his firm expects trading revenue to drop by a “high mid-teens” percentage in the first quarter, less than a week after JPMorgan Chief Executive Officer Jamie Dimon said revenue from equities and fixed income was down about 15 percent.