Bank of America and State Street are both making major cuts to their technology and operations staffs, it became clear this week. Bank of America was characteristically publicly mum about the cuts but did respond to some specific queries. State Street issued a press release that put a glossy spin on its layoffs.
Bank of America confirmed yesterday to the Charlotte Observer that it's laying off a "small percentage" of workers in its global technology and operations unit as part of an effort to streamline and centralize operations. The move was a "difficult but necessary decision," spokeswoman Nicole Nastacie told the paper.
The bank didn't disclose the number of workers affected. According to the paper, this division of Bank of America employs more than 100,000 in 34 countries, and accounts for more than one-third of the bank's workforce. It includes corporate workplace, corporate security and supply-chain management departments.
Employees told the Observer they have been learning of the cuts in recent days. Some affected employees will be able to move into other positions in the company, Nastacie said. Others will be offered severance.
Two weeks ago, we learned that Bank of America is conducting layoffs in Wichita, Kansas, where a call center that employs 310 workers, some in Customer Service and Solutions and others in Global Technology and Operations, is being shut down. A relocation package may be available to those interested in moving elsewhere within the Bank of America footprint, according to BofA spokesperson Laura Hunter.
Bank of America reportedly spent $10 million to renovate and equip this call center in 2006. Some of the customer service work that was performed in the call center will migrate to Fort Worth, Las Vegas, East Providence, RI and other virtual consumer sites across the Bank of America footprint, according to Hunter. GT&O work will migrate to Phoenix and Columbia, S.C.
State Street's announcement Tuesday was billed as a "multi-year program to enhance service excellence and innovation, increase efficiencies and position for accelerated growth." The bank says it will spend $400 to $450 million on restructuring and hopes to save $575 to $625 million over the course of four years. The layoffs are mentioned in paragraph six of the press release.
The release also mentions that the company is investing in "private processing clouds, which vastly increase global computing capabilities." State Street has been building a private cloud, providing shared servers and storage on demand to users for more than a year. It's unclear at this point whether these two things are related (the bank did not immediately respond to a request for comment).
Both banks are under end-of-year financial strain. Bank of America reported a third-quarter net loss of $7.3 billion that it attributed to a $10.4 billion "goodwill impairment" charge against coming regulatory limits on debit card interchange fees. The bank also expects regulations will continue to diminish its credit card revenues moving forward. While State Street's revenue rose 3% in the third quarter to $2.31 billion, Rochdale Securities analyst Richard Bove has said the bank may have overpaid for acquisitions this year, that its technology may have fallen behind the curve and that it needs to spend capital to bring it up to speed. This year the bank completed the acquisition of Mourant International Finance Administration and purchased the Securities Services business line from Intesa Sanpaolo; this week it confirmed its plans to purchase $79.3 million Bank of Ireland Asset Management.