Bank of America (NYSE:BAC) CEO Brian Moynihan plans to split the company’s banking operations in two, separating consumer from commercial units, closing 600 branches in the process as part of his “Project New BAC” program to streamline operations and cut expenses. Bank of America currently operates 5,900 banking centers, according to an SEC filing.
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In a statement Tuesday, Moynihan said “de-layering and simplifying at the scale in which we operate requires difficult decisions,” though he did not mention the planned branch closings, which were reported the following day by North Carolina-based WCNC News Channel 36. WCNC credited anonymous inside sources for the information.
However, analysts have been projecting significant cost cutting for some time now, well before Moynihan’s announcement Tuesday and the WCNC report Wednesday. A Bank of America spokeswoman says the company will continue “to consolidate the number of banking centers nationwide as customers continue to use self-service channels.” Addressing the reported branch closings, the spokeswoman said they had “nothing to do with the company’s announcements on Wednesday.”
The news follows an earlier announcement that the bank would lay off 3,500 employees. That plan, as well as news that the company would re-organize its business and close stores, had Guggenheim Securities analyst Marty Mosby reiterating his “Buy” rating on Bank of America’s shares Wednesday, giving them an $11 price target. Bank of America shares are currently trading at $7.39. “Moynihan is basically organizing BAC into a bank organization instead of a business line orientation,” said Mosby. Following the announcement that the company would be cutting thousands of jobs, he said “it is important for management to lead the way in demonstrating that everyone is going to have to change in order to accomplish this directive.”