On Thursday, the Charlotte Observer reported that Bank of America Corporation (BAC) is shutting its Charlotte Investment Center, a support unit of BofA’s Merrill Edge business. This closure will lead to a layoff of about 80 employees.
Earlier last week, the employees were informed about this shut down. It would be effective from June 30. However, a few of them will be offered same type of jobs in BofA’s investment center in Jacksonville, Florida.
BofA’s Charlotte Investment Center offers customer support to those clients who use Merrill Edge self-directed investing platform. The company’s Merrill Edge unit serves clients with investable assets in the range of $50,000-$250,000.
BofA’s spokeswoman did not disclose the exact details regarding the closure of the unit and the resultant layoffs; however, she confirmed the news.
Since 2010, the company has been striving hard to soar up its capital levels through the sale of its non-core assets and businesses. Additionally, last year, BofA had announced a cost-cutting initiative – Project New BAC – to streamline its workflows and processes, align businesses and expenses more closely with overall strategic plan and operating principles. Under the Phase 1 of this program, the company has set a target to bring down its operating expenses by $5 billion annually by the end of 2014 and a reduction of about 30,000 positions.
Moreover, last month, BofA cleared the stress test conducted by the Federal Reserve. In its capital plan submitted to the Fed, the company had not requested for any permission for new capital deployment. Earlier in December 2011, while addressing the investor conference of The Goldman Sachs Group Inc. (GS), BofA’s CEO had stated that the company will not seek approval for dividend hike until it is sure of the Fed’s clearance.
Clearance of the stress test shows BofA’s efforts in improving its balance sheet and capital ratios. Now, it is understandable that the closure of the abovementioned unit is also a part of the company’s plan to improve and streamline its operations.
BofA currently retains its Zacks #3 Rank, which translates into a short-term Hold rating.
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