35,000 jobs to go as banks merge and business slows


35,000 jobs to go as banks merge and business slows

Karl Flinders

Bank of America will cut 35,000 jobs over the next three years when it integrates the Merrill Lynch business and prepares for lower levels of business in the recession. But core IT staff are likely to be in a strong position to keep their jobs.

In September, Bank of America agreed a $50bn deal to buy Merrill Lynch which has 8,000 employees in EMEA, including 4,500 employees in the UK.

The bank, which has targeted $7bn in savings by 2012 from the takeover, is expected to integrate overlapping technology in the two organisations.

"The reductions are coming from both companies and affect all lines of business and staff units," said Bank of America. "As many reductions as possible will be made through attrition.

"The reductions are designed to eliminate redundancies created as a result of the merger with Merrill Lynch and to reflect the current recessionary environment."

But the jobs of core IT staff in the UK are likely to be more secure.

Chris Skinner, CEO at financial services think-tank Balatro, said IT people involved in algorithmic trading strategies were unlikely to lose their jobs. "Merrill Lynch's IT operation is highly automated using algorithmic trading. As an IT operation it is one of the most sophisticated in the City."

The redundancies announced by Bank of America, which represent 11% of the combined workforce, follow 50,000 job cuts announced by Citigroup last month.

Citigroup CEO Vikram Pandit said it was feasible for the bank to take 10%, 15% or 20% off its cost base, especially in IT and operations.

Other investment firms that have announced job cuts include Credit Suisse and Nomura.

Bob McDowall, analyst at TowerGroup, said as many as 300,000 people could have lost their jobs in the financial services sector globally by the end of 2009, with IT professionals comprising up to 25% of those affected. These cuts will come as mergers are completed and companies prepare for a slowdown in business.

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