Bank of America chief to make $5bn cuts in bid to reverse company’s slide

Brian Moynihan to oversee company overhaul known as Project New BAC, which could lead to the loss of 40,000 US jobs Bank of America’s boss faced his sceptics in New York on Monday morning and promised another $5bn of cuts as he fights to halt the precipitous slide in the fortunes of the US’s largest bank. Brian Moynihan has faced fierce criticism from investors as the financial giant’s share price has collapsed. Moynihan is overseeing a restructuring of the bank that could lead to the loss of 30,000 to 40,000 jobs, and is likely to end Bank of America’s reign as the largest US bank by assets. “We don’t have to be the biggest company out there: we have to be the best,” Moynihan told the audience at the Barclays 2011 Global Financial Services Conference. Bank of America’s shares have halved since the start of the year, dragged down by the faltering economy and a wave of litigation over the bank’s involvement in sub-prime mortgages. The cuts are the first phase of an overhaul known as Project New BAC , and will be finalised by the end of 2013. “We can get out of things we don’t need to do, [to] make the company leaner, more straightforward, more driven,” Moynihan said. Last month Warren Buffett pumped $5bn into Bank of America, a vote of confidence from the world’s most respected investor that initially drove up the bank’s shares. Buffett made a similar investment in Goldman Sachs at the height of the credit crisis that generated a huge payday for shareholders in his Berkshire Hathaway investment fund. Bank of America’s share price rose sharply on the news of Buffett’s bet, but the company has since lost all that gain. Moynihan told the New York conference he was “very pleased” with the investment, which has been criticised by analysts as too favourable for Buffett. Moynihan said the bank faces three key issues. He said it was being held back by slow growth in the US economy, by its disastrous purchase of sub-prime home loan giant Countrywide in 2008, and by regulatory changes that will force banks to keep aside more money for a rainy day. Last quarter, Bank of America reported an $8.8bn loss , owing in large part to a settlement with mortgage investors related to Countrywide. Asked whether he consider filing bankruptcy for Countrywide, Moynihan said the bank “looks at all our options on everything.” Bank of America US economy Banking Banking reform United States Warren Buffett Dominic Rushe guardian.co.uk

Posted by on September 12, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.