Yahoo Finance Bank of America (BAC) Plans to Remove 40 IB Positions in Asia
Bank of America BAC intends to eliminate around 40 positions in its Asia region’s investment banking (IB) unit, per a Bloomberg report. The primary reason for this is the slump in dealmaking activities across the industry. Nonetheless, the company plans to relocate these bankers to other divisions.
Of the affected employees, the majority are based out of Hong Kong, with a particular emphasis on China, and hold junior positions, per the persons familiar with the matter. BAC’s latest redeployment strategy aims to serve as a temporary measure in response to the dealmaking scarcity and slowdown in China’s economy.
Besides, Bank of America does not have a direct presence or operations on the mainland of China. Instead, the company operates its IB and equities businesses for China from offshore locations.
Notably, since last year, BAC’s IB business has been struggling, primarily due to the poor performance of underwriting and advisory activities across the globe. This can largely be attributed to the global decline in dealmaking, caused largely by the Russia-Ukraine conflict, recessionary concerns and high inflation. Weakness in the IB business is expected to persist until there is more clarity regarding macroeconomic and geopolitical conditions.
Over the past six months, shares of BAC have declined 23.7% compared with the industry’s fall of 13.4%.
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Currently, Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank of America is not the only one trimming its workforce. Many other Wall Street banks, including Citigroup C and Morgan Stanley MS, have been taking similar steps in their IB and wealth management divisions.
This March, Citigroup initiated a round of job cuts, slashing hundreds of jobs across the firm, which accounted for less than 1% of its total workforce. According to people familiar with the matter, the company’s IB division, its operations and technology organization, and the U.S. mortgage-underwriting division were among those affected.
In its IB division, Citigroup was struggling because of the industry-wide slowdown in dealmaking. In its mortgage division, the company was grappling with reduced mortgage demand because of rising prices and a rapid increase in mortgage rates.
Likewise, in mid-May, it was reported that Morgan Stanley is planning to slash nearly 7% of Asia-Pacific IB Jobs. This is part of the broader 3,000 IB job cuts the company announced recently. The development was first reported by Bloomberg News.
Of the total cuts, China is likely to take the biggest hit as slowing economic growth in the country is curbing dealmaking. Last year, MS slashed roughly 50 IB jobs in the Asia-Pacific region, with a large number being China-focused positions.
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