Bank of America said it will cut about 7,500 jobs after it closes its acquisition of Countrywide Financial Corporation, a mortage lender. The job cuts amount to about 12.5 per cent of the combined companies’ mortgage, home equity and insurace business, after the purchase is completed this week. The Charlotte-based bank said the cuts will take place over the next two years in locations across the country in instances where the two companies have significant overlap. The company will begin notifying affected employees in the third quarter.
Bank of America expects to close the deal by July 1, having received the go-ahead from countrywide shareholders last week. The all-stock deal, valued in January at about $4 billion,is now worth around $2.8 billion, reflecting a decline in Bank of America’s stock price over the last six months.
Earlier this month, the federal Reserve cleared the way for the acquisition, which would give the bank control of 20 per cent to 25 per cent of the home loan market.
The bank had lost about $1.6 billion in the last six months of 2007 and another $893 million in the first quarter of this year. It also face numerous investigations and lawsuits related to its lending practices. Bank of America is expected to report its second quarter earnings by July 21, as its shares tumbled by $1.80 or 6.8 per cent to $24.81 last week, while Countrywide shares fell 16 cents or 3.5 per cent to $4.42.