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BofA plans to slash 7,500 jobs

CHARLOTTE -- Bank of America expects to cut 7,500 jobs after it buys Countrywide Financial next week, the Charlotte bank announced Thursday.

The bank will begin notifying affected employees in the third quarter, which begins Tuesday, the day of the purchase.

The cuts will be in the combined mortgage, home equity and insurance division, which will be based in California and would have encompassed about 60,000 employees after the merger.

On Wall Street, Bank of America shares fell 7 percent to $24.81.

Bank of America declined to specify how many of the layoffs would affect bank employees and how many would affect the ranks of Countrywide.

Most of the combined mortgage operation will be former Countrywide employees; the lender had 50,600 workers at the end of 2007, while Bank of America had about 12,000 in its consumer real estate division. Companywide, it had 210,000 workers.

The layoffs had been expected, though the bank had not previously disclosed any numbers. When it announced the acquisition in January, the bank said it expected to cut expenses of the combined operation by about 11 percent by 2011. The layoffs announced Thursday represent 12.5 percent of the combined mortgage unit.

Analyst Nancy Bush of NAB Research in New Jersey said the layoffs are partly related to the financial industry's free fall, not just the Countrywide acquisition.

"This isn't Charlotte-centric, this is industry-centric," Bush said. "I would not be surprised to see all the major banks announce fairly sweeping layoffs after the second quarter. Earnings aren't there. You can't pay for people."

Dick Bove, an analyst at Ladenburg Thalmann, said he expects Bank of America will try to avoid large layoffs in Charlotte. "It is likely to concentrate on lagging businesses to make the cutbacks," he wrote in an e-mail.

The job cuts will take place throughout the country over the next two years. In a prepared statement, Bank of America said final decisions on where the cuts will come have not been made.

The bank would not specify how many of its mortgage employees are based in Charlotte. It did say that most of the job cuts will occur in areas of significant overlap, such as staff support. Eligible employees will be offered severance packages.

The layoffs mean Bank of America has announced more than 15,000 job cuts since last fall, some related to acquisitions and some related to the nationwide mortgage crisis.

The bank trimmed 4,000 jobs when it acquired Chicago's LaSalle Bank in October, then cut an additional 3,650, mostly in investment banking, in October and January.

Gary Townsend, a former analyst who has launched a Maryland-based investment firm, said he thinks this round of layoffs will come mostly from Countrywide.

"That's often how these things go," Townsend said. "Particularly with an acquiree like Countrywide, with a recent history that's been less than stellar. The employees at Countrywide might be seen as less essential than some of the employees providing the same types of services and with the same skills at Bank of America."

One likely area of overlap, he said, will be mortgage sales, but not mortgage servicing since Bank of America doesn't have a large presence in that area.

Bank of America, already the country's largest consumer bank, will be the largest mortgage lender after it completes its $4 billion takeover of Countrywide. The mortgage lender's shareholders approved the acquisition Wednesday, the same day that California's attorney general filed a lawsuit accusing Countrywide of tricking borrowers into risky mortgages that they didn't fully understand.

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