BankAmerica Corp. plans to eliminate as many as 150 positions in its exchange-traded futures business, a move that could foreshadow further cutbacks internationally.
The $595 billion-asset banking company broke the news to brokers this week at trading offices in London, Singapore, Hong Kong, Tokyo, and Chicago, according to a spokeswoman. The company would be left with about 50 people in futures clearing activities.
Analysts predicted that the Charlotte, N.C., company, the product of the Sept. 30 merger of BankAmerica and NationsBank Corp., will continue cutting away at overseas businesses in the wake of a 78% decline in third-quarter net income, to $374 million.
"I wouldn't be surprised to see BankAmerica continue to pull back on international operations and return to a more traditional, regional bank profile," said Joseph K. Morford, an analyst with Van Kasper & Co. in San Francisco.
International trading and lending had been one of the perceived strengths of the pre-merger, San Francisco-based BankAmerica. A reported $579 million trading loss in the last quarter, worsened by a $372 million loss from a loan to hedge fund operator D.E. Shaw & Co. of New York, may have changed that perception, at least among NationsBank officials.
Most of the problems were on the old BankAmerica side. David A. Coulter, the former BankAmerica chief executive officer, resigned last month and was perceived to be taking the blame for the losses.
Observers said the old BankAmerica's penchant for risky international trading did not sit well with its merger partner, which was more heavily focused on domestic business lines.
"NationsBank consistently stressed they were an American bank, while one of the old BankAmerica's strengths was its international prowess," said Michael L. Mayo, an analyst with Credit Suisse First Boston. "This is the first battlefield of the culture clash between the banks."
BankAmerica spokeswoman Holly R. Seagle declined to comment on whether the move is a reaction to the third-quarter results. Instead, she cited a reduction in potential profits and the fact that customers can execute futures trades from their desktops, thereby reducing the demand for brokers.
"Based on those issues, the returns were just not enough to justify staying in this part of the business," she said.
The high cost of technology required to remain competitive in this part of the market all but forced the cutbacks, she added.
This represents a turnabout for BankAmerica, which early this year invested millions of dollars in a new high-technology trading floor in Chicago, the headquarters for futures trading.
The 140 to 150 employees affected by the job cuts are futures brokers, who take orders from customers and transmit them to the trading floor, Ms. Seagle said. The bank plans to offer qualified employees other positions in the bank.
Ms. Seagle stressed that this week's announcement does not represent a departure from futures.
"We're still a big player in the market," Ms. Seagle said. "We still provide clearing products, and that will not change."