The nation's largest bank is sobering up to the grim reality that it's strapped for cash and needs to start slashing spending. On Monday, Bank of America chief executive Brian Moynihan announced the bank is cutting $5 billion out of its annual costs of roughly $73 billion. It's also been a frightening Monday morning for the banks 300,000-person workforce. Though reports on Friday indicated that the bank would slash as many as 40,000 jobs, MarketWatch reports this morning that the number is 30,000 "over the next few years." The Wall Street Journal adds that "the bank is looking to put behind [its] other costs such as mortgage and litigation costs that aren't part of normal business. Those extra costs totaled about $18 billion of the bank's total $73 billion for the 12 months ended in March."
Why such a bleak outlook? Despite a $5 billion investment from Berkshire Hathaway CEO Warren Buffett in August, analysts tell Reuters the bank has "not properly integrated systems or closed unnecessary branches." (It has 5,700 branches nationwide.) Shares in the bank have been nearly halved in their value as anxieties pile up that the bank doesn't have enough cash. "By many estimates, the bank will need to raise about $50 billion in coming years to meet new global capital requirements, a level the bank says it can reach through earnings and asset sales." In a live blog of Moynihan address, The New York Times reports that Moynihan "outlined three major issues facing the bank: stagnant economic growth in the U.S., legacy mortgage issues, and a new regulatory capital regime." Shares of the bank rose 0.7 percent after the announcement.