Up to 20,000 jobs look set to be lost as a result of the imminent merger of Merrill Lynch and Bank of America, as a further 10,000 job losses were announced across the investment banking fraternity.
Although restructuring teams working across both Merrill and BoA are still deciding on final headcount reductions, it is understood that the cuts will come through reducing overlap between the two institutions – in particular in areas such as technology and support services.
Duplication in Merrill’s strong brokerage arm and BoA’s private client business will also be hit.
Earlier reports that as many as 30,000 jobs woulds be lost are now understood to be wide of the mark. However, the cuts are likely to be twice the 10,000 redundancies that BoA internally estimated would be needed at the time of the rushed merger in September. Together, the two banks currently employ 360,000 staff.
Both companies’ shareholders are due to vote on the merger today, but the cuts are not expected to be announced in full until next year, with actual redundancy announcements beginning at the end of January.
A Bank of America spokesman said: “We are currently evaluating our staffing levels, given both the pending merger with Merrill Lynch and the weak economic environment which is affecting the level of business activity. While we believe both factors will result in the elimination of positions, we have not completed our analysis. We expect to have a final plan early in 2009.”
It is also understood that as a result of Merrill’s recent performance, the investment bank’s final bonus pool is down 70pc on last year, with senior staff having already been informed that many will get no bonus.
Merrill is due to inform staff of bonuses on December 22, with payment due at the end of the month. A spokesman for the bank declined to comment.
Elsewhere, Credit Suisse announced it is to lose 5,300 staff – 11pc of its workforce – including 650 jobs to go in London. The Swiss bank, which has already cut 1,800 jobs this year, is trying to make savings of SFr2bn (£1.1bn) a year, with most of the cuts likely to come in its investment banking arm rather than its private client and wealth management business.
London is to lose a further 2,200 investment banking jobs with 1,000 jobs being shed at Nomura and 1,200 at Dresdner Kleinwort.
Nomura, which bought Lehman Brothers’ European business, is cutting roughly a quarter of its 4,500-strong British workforce. Dresdner is shutting its UK mergers and acquisitions business as part of its cutbacks after being taken over by Commerzbank. The investment bank has to date been a significant player in the London M&A scene, advising HBOS most recently on its pending takeover by Lloyds TSB.
In addition, US institutional bank State Street is to lose 1,800 staff, or roughly 6pc of its global workforce, in a series of redundancies.
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