Bank of America Corp., grappling with the slowing economy and preparing to integrate newly acquired Merrill Lynch & Co., purged about 20 high-ranking executives last week, including some longtime loyalists of Chief Executive Officer Kenneth Lewis.
The cuts were the first among 30,000 to 35,000 expected over the next three years at the Charlotte, N.C. bank and underscore how widespread reductions will be as Bank of America looks to weather the financial crisis. It is also another demonstration of how careers are being ravaged for thousands of once fast-rising finance professionals, even at institutions like Bank of America that appear to be more successfully navigating the crisis than others.
The departing executives, at least some of whom were asked to vacate their offices by the end of the day they were given notice, were taken from the bank's so-called "band 1" layer of management, one rung below CEO Kenneth Lewis and the other C-level executives. Some were longtime managers at Bank of America, a few dating to the days when the company, then called North Carolina National Bank, began its aggressive campaign of acquisitions that created the nation's first and largest coast-to-coast retail bank.
Bank of America's belt-tightening follows similar moves at other U.S. firms ravaged by the financial crisis; a total of 92,260 job cuts have been announced at major banks since October, including 52,000 jobs at Citigroup Inc., or 15% of its workforce, by early 2009. San Francisco-based Wells Fargo & Co. is also expected to make sizable cuts once it completes its acquisition of Wachovia Corp., which employs about 20,000 people in its headquarters city of Charlotte.
Among those asked to leave at Bank of America, according to people familiar with the situation and internal bank communications, were deputy general counsel David Onorato; Helga Houston, a compliance and risk management executive for global consumer and small business banking; Lance Drummond, a senior e-commerce executive in charge of the Web site, bankofamerica.com; Brad Dinsmore, head of consumer banking on the West Coast; Mark Ricci, a sales, service and integration executive; and Chris Swecker, hired in 2006 from the Federal Bureau of Investigation to run the bank's corporate security organization. Another was general counsel Tim Mayopoulos, who was replaced by Brian Moynihan, most recently head of corporate and investment banking.
Bank of America disclosed Mayopoulos' exit last week but didn't signal that it was part of a larger, high-level blood-letting. A spokesman declined to comment on the other departures. "We only announce personnel changes when it involves the very top people in the company," said spokesman Scott Silvestri. "We don't believe it is appropriate to publicize other such decisions due to the privacy concerns of our associates."
Former Bank of America executives said the ousters amounted to one of the largest purges of longtime executives during Lewis's seven-year leadership of the company. Houston, for example, joined the bank in 1986, when it was still known as North Carolina National Bank, or NCNB. Drummond was often touted as one of the firm's highest-ranking African-American executives. Dinsmore, said people familiar with the company, was a close confidant of Liam McGee, the president of Bank of America's consumer and small business bank. Ricci, these people said, was close to Barbara Desoer, the woman tapped this year to run the company's mortgage operations following its acquisition of Countrywide Financial Corp.
"They were very loyal soldiers," said a person familiar with the situation. "This was a real shock and a major blow."
The 30,000 to 35,000 reductions planned by Bank of America represent about 10% to 11% of the company's total workforce after it completes the acquisition of Merrill, a deal expected to close by Jan. 1. The cuts reflect both redundancies created by the Merrill acquisition and the "current recessionary environment," Bank of America said last week.
Spokesman Robert Stickler acknowledged last week that some reductions relating to the current crisis have started already, without specifying where the cuts were made. He said the layoff notices so far were "relatively immaterial" in number.
Top executives from Bank of America and Merrill are meeting this week to discuss more cuts, according to a person familiar with the matter.
Because of its size, Bank of America has broad exposure to the battered U.S. housing market, rising credit-card delinquencies and a litany of other consumer problems. It recently cut its dividend after third-quarter income fell 68%.