Bank Of America Layoffs: Will It Affect RI?
Saturday, August 20, 2011
Bank of America, the country’s largest bank, will slash 3,500 jobs this quarter and will continue with a plan to cut 10,000 jobs over the next year, according to news reports that surfaced Friday.
Spokesman T.J. Crawford confirmed the bank’s plan to cut the 3,500 jobs. Crawford said he could not confirm where the layoffs would occur, but noted that there are more than 280,000 employees working for the company around the world and that the cuts could happen anywhere. Bank of America employs about 3,500 Rhode Islanders.
“We are not providing a geographic breakdown at this point,” Crawford said.
Bank Of America Tanking
This job cuts appear to reflect CEO Brian Moynihan’s goal to engineer a recovery at Bank of America, which is still trying to make up for its losses from the housing crisis. The company’s share price has dropped by nearly 50 percent this year alone.
The initial wave of layoffs is expected to be completed by the end of next month, but the bank, which has lost for than $22 billion in its consumer mortgage division over the last year, is not ruling out more cuts down the line.
Mazze: Not A Surprise
Dr. Edward Mazze, Distinguished University Professor of Business Administration at the University of Rhode Island said the bank’s plan to restructure should not come as a total surprise.
“The Bank of America decision to reduce its branch network and cut employees was no surprise when you look at the challenges B of A is currently facing,” Mazze wrote in an e-mail to GoLocalProv. “ For Rhode Island, I suspect they have been evaluating each branch and will eliminate branches in geographic areas in the state in which their business is not going anywhere because of changing demographics, e.g. population flows, and the poor state of the Rhode Island economy.”
The greater concern for the Ocean State: Mazze said Bank of America might not be the last bank to make cuts in Rhode Island.
“Other national banks operating in Rhode Island will also eliminate some branches because the Rhode Island economy seems to be going nowhere,” he said. “When banking decisions are made in Charlotte, Canada, Spain and Scotland, Rhode Island is not going to come out ahead of other states. Today's banking customers are doing their banking on the internet and through other types of financial institutions. When the national bank branch shakeout is over in Rhode Island, many branches will be closed. This will present opportunities for local banks and financial institutions to provide the customer services required by consumers and business customers which often does not come from large national and international banks.”
Superman Building A Concern
Bank of America’s announcement came on the heels of the most recent jobs number announcement in the state. For back to back months, Rhode Island’s unemployment rate has held steady at 10.8 percent, even though the number of employed dropped more than 2,700 from June.
URI Professor Len Lardaro said the state wouldn’t be to tell the affects of the layoffs until it learned if job losses would occur in Rhode Island. Either way, he said the state still has a looming concern when it comes to Bank of America.
“I would need to know the number of potential RI layoffs to answer your question,” he said. “The true worry for RI, though, is whether Bank America retains the headquarters in Providence. Rumor is that they might leave there. If so, then more bad news, but really bad news.”
In June, former Mayor Joe Paolino said the bank’s headquarters –known locally as the Superman building- was the “ticking time bomb of downtown Providence.” He called on state leaders to fly to North Carolina to visit with Moynihan and convince him to commit to keeping the bank in Providence.
Paolino has said a vacant Superman building would be a major blow to the city.
“It would be like the Biltmore closing. It would kill local businesses,” he said.
Comments:
Lance Chappell
8:50am on Saturday, August 20, 2011
This bank along with other mega banks have been hurting the people of this state for quite some time. The high fees and interest rates they charge force people to leave them. They are no match for credit unions or the small community banks. B of A originally was the Industrial National Bank in the 50's and 60's. Under Terry Murry, that bank gobbled up small banks in Rhode Island and went into Massachusetts and gobbled up Shawmut and other big banks. It was eventually sold to Bank of America on the West Coast to become the nations biggest bank. This bank may have gotten so big that they figured they could buy out the toxic assets of Countrywide Mortgage and sell off those assets at a profit. Bad decision made here. Now they are in trouble themselves with their stock tanking, the employees become the pawns and the branches will start to close. The cycle is now complete!