Bank of America (BAC) to Cut Thousands of Jobs at Consumer Banking Unit

Bank of America

Bank of America (NYSE:BAC) is planning to eliminate thousands of jobs at its consumer banking unit as part of its initiative to increase its revenue. The job cuts are coming while the bank also continues to hire sales people, according to Charlotte Observer based on information from a senior executive.

The shares of Bank of America are trading $13.59 each, up by 2.49% around 1:26 in the afternoon today in New York.

During an investor conference on Tuesday, Thong Nguyen, president of retail banking and co-head of consumer banking at Bank of America said as much as 8,000 jobs will be eliminated.

Since 2009, the bank’s head count at its consumer banking unit declined almost 40% to 68,400. Mr. Nguyen said that “will probably go down to the low 60s.”

Mr. Nguyen did not provide details regarding the schedule of the implementation of the workforce reduction. A person familiar with the situation indicated that the bank will eliminate jobs primarily through a natural turnover.

Consumers increasingly making transactions on ATMs, mobile devices

According to Mr. Nguyen, Bank of America will continue to reduce the number of employees whose jobs are related to transactions such as tellers handling deposits and cashing checks. At present, consumers are increasingly using their mobile devices and ATMs for those transactions.

He noted that around 7 million customers go to its branches to do their transactions every week, but the number is going down by 11% a year. Mr. Nguyen said, “people show up less and less in a branch to make a deposit or a withdrawal because they can do that through an ATM or mobile and online.”

Mr. Nguyen added, “You used to come to a branch to make a deposit, a withdrawal, or payments. Now you’re going to use the branch to go in and open a credit card, an auto loan, a mortgage, investments, or have customer service because you have a death in the family or you just moved.”

Bank of America is reinvesting in sales force

Mr. Nguyen also emphasized that the bank is reinvesting in its sales force. “Just to give you an idea, the salespeople used to be 5 percent of our employee base. Today, it’s 30 percent,” explained Mr. Nguyen.

According to him, Bank of America’s branches are becoming more sales-oriented. The bank currently has 4,700 branches, which is expected to remain relatively flat going forward.

Bank of America plans to renovate its branches for new users. It will start with 1,500 branches, and then 200 to 300 branches every year, said Mr. Nguyen.