Bank of America-Countrywide merger to cost 7,500 jobs

27 Jun 2008

Mumbai: Bank of America Corporation, the second-largest US bank, will cut about 7,500 jobs, or three per cent of the combined workforce, over the next two years when it completes the acquisition of Countrywide Financial Corp, the largest mortgage lender in the country.

Bank of America had about 209,100 employees at the end of March this year while Countrywide had around 50,400.

The job cuts will mainly be in areas like staff support, where the two companies have significant overlap, Bank of America said. The reductions are expected to happen over the next two years, and affected employees will be notified in the third quarter, the bank said.

Charlotte, North Carolina-based Bank of America said it will offer severance packages to eligible workers.

The bank plans to complete the transaction by July and expects ''substantial cost savings" from the merger.

Countrywide has already cut some 11,000 employees since the middle of 2007 amidst mounting loan losses and cutbacks in risky loan offerings.

Shareholders of Calabasas, California-based Countrywide expect to get 0.1822 of a Bank of America share for each Countrywide share held.

The transaction, approved by regulators and Countrywide shareholders, valued Countrywide at about $4 billion as of 11 January, when the companies announced the merger. That valuation has fallen by a third with the fall in Bank of America shares.