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By Jonathan Stempel
NEW YORK (Reuters) - Bank of America
Corp., the No. 2 U.S. bank, on Monday said it plans to cut 12,500 jobs
over the next two years as a result of its $48 billion purchase of FleetBoston
Financial Corp.
The cuts amount to about 7 percent of the combined banks' work force
of more than 180,000. Bank of America said about 30 percent of the cuts
will be through attrition.
"They feel like they have something to prove to Wall Street to
convince investors like ourselves that they didn't pay too much for
Fleet," said Larry Puglia, who runs the $7.6 billion T. Rowe Price
Blue Chip Growth fund and owns Bank of America shares. "It is an
unfortunate aspect of entering into large mergers like this that there
will be some job losses."
Kenneth Lewis, chief executive of the Charlotte, North Carolina-based
bank, has targeted $1.6 billion of cost savings from the merger, which
was completed on April 1. The combined bank has about $938 billion of
assets, 5,700 banking offices in 29 states and Washington, D.C., and
about 36 million customers.
Bank of America said it will begin making cuts this month, and that
most will affect support staff and areas where Bank of America's and
Fleet's businesses overlapped. It said it began notifying employees
of the cuts on Monday.
"When we discuss job reductions, we are talking about positions,
not necessarily people," said new Chief Financial Officer Marc
Oken in a statement. "These are difficult decisions."
Bank spokeswoman Eloise Hale said: "Decisions around reductions
will be determined on maximizing our ability to run the combined organization.
We are structuring the company to meet the best needs of our customers."
Bank of America said it will "strive" to find new employment
opportunities at the bank for affected personnel. It said some New England
jobs will be lost in the short-term, but that it will add new jobs to
the region and is "committed" to maintaining overall New England
employment levels.
Fleet was based in Boston.
Citigroup Inc. is the largest U.S. bank. Bank of America is expected
to drop to No. 3 when J.P. Morgan Chase & Co. buys Bank One Corp..
Bank of America shares rose 74 cents to $81.25 in Monday trading on
the New York Stock Exchange (news - web sites). The shares have fallen
less than 1 percent since the Fleet merger was announced on Oct. 27,
while the Philadelphia KBW Bank Index .BKX> has risen 9 percent.
Bank of America agreed to pay more than a 40 percent premium for Fleet.
(Additional reporting by Jake Keaveny)
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