Bank of America Corp. is laying off less than 5 percent of its investment banking staff and will tell employees about the cuts this week, a source familiar with the plans told Reuters Monday.
The move would be the first significant organized reduction in the division's workforce since BofA bought investment bank Merrill Lynch in January 2009 during the financial crisis and comes as markets have slowed after a torrid start to 2010.
Bank of America's global banking and markets division reported net income for the first six months of 2010 of $4.15 billion, down 35 percent from $6.42 billion a year prior. In its second quarter report, the attributed the slowdown to "widespread market deterioration," higher expenses and lower interest income.
The S&P 500 stock index has declined 6.2 percent since an April high and is only up 2.3 percent since the start of 2010, due in part to a September rally.
All units within the global banking and markets division, overseen by Tom Montag, will be affected. Even with the layoffs, the division is expected to have more employees at year's end than it did at the end of 2009, the source said.
It was unclear how many people work in the division.
The cuts were initiated by a review by Montag and his management team earlier this year, the source said.
Montag has expanded Bank of America's investment banking operation overseas within the last 18 months, although expansion within in the division has slowed this summer.
Last week, Chief Executive Brian Moynihan said Montag's division had hired 800 new employees overseas, focusing on Asian and European markets that the bank is counting on for future revenue growth.
Bank of America shares closed Monday up 33 cents, or 2.46 percent, at $13.74 on the New York Stock Exchange.
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