Boston, MA 10/29/2013 (wallstreetpr) – As strange as it may sound, one of the largest banks in the world, Bank of America Corp (NYSE:BAC) has decided to slash 4000 jobs because its business is getting better. These cuts would happen in two tranches and in the first round 1200 employees would be axed in next few days. The bank has declared that the first 1200 employees were involved in servicing of mortgage loans which had turned delinquent. And with rising mortgage markets, the number of delinquent loans has dwindled down to one third of its peak level. Hence requirement of people for servicing these loans has also come down drastically.
The next phase of 2800 job cuts would take place by the end of year. As per company’s disclosure, these employees are involved in payment collection from those borrowers who have fallen behind their payment schedules and might need to be slightly forced to pay up. Though company has claimed that most of these affected people would be from those divisions which have mostly contract workers, company followers are finding it hard to believe. If what company is saying is true, then most of company’s permanent workforce would not be affected by this decision.
The bank has also said that it is consciously reducing its headcount in specific divisions to realign its operation with the demand for its mortgage refinancing product. Since there is lack of demand for this product, there is lesser need of full time employees for such work. The bank is said to be working with those affected to find suitable employment within and outside the organization.
Markets seem to be affected positively by the news as this headcount reduction means that lower number of company’s mortgage loans are going bad these days. And combination of this fact with lower wage bills augers well for the company’s balance sheet.
