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BofA (BAC) Cuts Staff in Investment Banking & Trading Units

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After avoiding workforce reductions for almost a year amid the coronavirus pandemic, Bank of America (BAC - Free Report) has cut its staff in Global Banking and Global Markets segments this week. This was reported by Bloomberg News, citing persons familiar with the matter.

Employees in sales and trading, research, investment banking and capital markets were affected by the move. The reductions are part of BofA’s typical round of staffing changes this time of year, after bonuses are distributed.

Last year was a roller coaster ride for BofA. Following the pandemic-induced mayhem and subsequent economic slowdown, the company’s profitability was badly hit. Lower interest rates and faltering loan demand substantially hurt net interest income growth. Though trading and investment banking operations offered some support to the top line, that wasn’t sufficient. As such, net revenues declined more than 6% in 2020.

Nonetheless, it began 2021 on a promising note as coronavirus vaccine breakthroughs and subsequent usage of the same have fueled hopes of faster economic recovery. Also, demand for loans is expected to improve gradually in the latter part of the year. Thus, BofA is likely to witness improvement in profitability in the upcoming quarters.

Shares of this Zacks Rank #2 (Buy) stock have rallied 23.3% over the past year, outperforming the industry’s 17.6% rally. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



BofA wasn’t the only one that paused job cuts last year. Wall Street biggies including JPMorgan (JPM - Free Report) , Morgan Stanley, Goldman Sachs and Wells Fargo (WFC - Free Report) did the same in the earlier part of 2020. Nevertheless, Wells Fargo — amid mounting pressure to lower operating expenses — was among the first ones to start slashing jobs in the second half of 2020.

Subsequently, Goldman and Citigroup (C - Free Report) followed suit. Earlier this year, it was reported that even JPMorgan is mulling to reduce staff in the consumer division. Morgan Stanley, which hasn’t resorted to any job cuts till now since the pandemic outbreak, may do the same once the buyout of Eaton Vance is concluded early next week, as redundancies are common in any merger.

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