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Report: BofA planning to cut 10 pct of branches
2009-07-28
CHARLOTTE, N.C. - Bank of America Corp.'s CEO Ken Lewis said he is planning to shrink the bank's 6,100-branch network by about 10 percent, The Wall Street Journal reported Tuesday. The newspaper said Lewis told investors of the plans at a meeting last week in Charlotte, where the bank is based. The Journal cited unidentified people familiar with the discussion. The move would be a pullback from the bank's two-decade expansion, most recently under Lewis' command, which expanded the bank from coast to coast. A Bank of America spokesman could not be reached for immediate comment. Shares of Bank of America fell 7 cents to $13.02 in premarket trading Tuesday. The newspaper said it was told Liam McGee, president of Bank of America's consumer and small-business bank, cited changing customer preferences for the move, saying more people are using online and mobile banking. McGee, however, reportedly said it would be premature to specify how many locations could be closed. The report comes as Bank of America continues to be under the careful watch of the U.S. government, while it works to integrate two recent deals. Bank of America acquired troubled mortgage lender Countrywide Financial Corp. last summer and investment bank Merrill Lynch & Co. in January. Those two acquisitions have proven challenging for Lewis, who was stripped of his chairman title by a shareholder vote at his company's annual meeting in April. The bank and Lewis have been under intense scrutiny because Bank of America is one of the biggest recipients of government bailout money -- $45 billion -- and because the losses at Merrill Lynch turned out to be much higher than expected. It is not known when it will repay the government. Last week, Bank of America announced a big second-quarter profit, but tempered the news by reporting it is still contending with losses from failed loans. During a call with analysts, Lewis said it would be "much tougher" to turn a profit for the rest of the year. "Closing branches actually makes a lot of sense from a standpoint of trying to cut costs and have profitability," said Jason O'Donnell, a senior research analyst at Boenning & Scattergood Inc. And because of the bank's numerous acquisitions over the years, "BofA does have the luxury of looking back and getting rid of overlap and overhead," O'Donnell said. Bank of America has become a financial powerhouse befitting of its name. First under chief executive Hugh McColl Jr., and since 2001 under Lewis, the bank has grown through acquisition from a little North Carolina National Bank into a behemoth that holds more assets and deposits than any U.S. bank. In 2004, the bank acquired FleetBoston Financial, a move that gave Bank of America $133 billion in deposits in eight Northeastern states. Three years ago it added millions of names to its customer ledger through the purchase of credit card issuer MBNA Corp. In 2007, the bank completed its purchase of wealth management company U.S. Trust and acquired LaSalle Bank Corp., immediately turning Lewis' bank into the market leader in Chicago. The acquisition of California-based Countrywide last year brought Bank of America to the forefront of the mortgage business, and the Merrill Lynch deal bought the bank a large presence back on Wall Street.
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