Bank of America (BofA) has announced that it will lay off 650 investment banking staff and sell its prime brokerage business, as the chairman and chief executive’s remarks about the ‘fun’ of investment banking come back to haunt him.
Last October, Kenneth D Lewis had announced 3,000 jobs were to be cut and in response to questions about a possible takeover, he said: “I’ve had all the fun I can stand in investment banking.”
But Lewis has been forced to admit his remarks were unfortunate after announcing that 650 further layoffs must be made.
After massive losses, BofA, which is the biggest US bank by market value, will sell off its hedge fund unit to raise much-needed cash.
In addition, the bank will limit its securitised products offerings, including collateralized debt obligations.
After a 93% decline in third-quarter results at the investment banking arm of BofA, the bank admits that final-quarter earnings were also likely to disappoint, even though it may have made some profit.