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Monday, September 20, 2010

Bank of America Celebrating the End of the Recession by Cutting Staff

By Charlie Gasparino
Fox Business News

Bank of America appears to be the first major financial firm to start cutting jobs as a growing number of analysts predict a Wall Street profit slowdown will pick up steam for the rest of the year, FOX Business has learned.

Though the cuts are said to be modest in size — around 5%, and only in certain profit-challenged areas of the bank’s capital markets unit — the move to trim jobs by capital markets chief Tom Montag is seen as significant inside the bank, people close to the matter say.

Montag had been increasing the size of his capital markets staff, which includes bankers and traders, all year. Now, though there’s no official hiring freeze, he’s in the cut-back mode, these people say.

The cuts are expected to be announced this week and will impact trading desks, which have been hardest hit by the recent profit squeeze among the big banks.

A Bank of America spokesman refused to deny that cuts are coming this week, but the spokesman said for the year that headcount in the capital markets arm of the big bank “is continuing to expand,” and that the business as whole is “performing soundly.” People inside Bank of America are grousing that Montag is cutting staff now so as to deprive the unlucky employees year-end bonuses. The spokesman refused to comment on the bonus issue.

All major financial firms are bracing for a difficult third quarter, which will result in lower profits, and likely layoffs. At Morgan Stanley instance, senior executives have been told to expect sharply lower year-end bonuses. At Goldman Sachs, bonuses could decline 10% from last year’s levels.

Wall Street firms are experiencing a profit pullback thanks to a combination of relatively low investment-banking activity, lower trading volumes and increased costs from new regulations.

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