Bank of America has become the latest firm to lay off staff after announcing that it will cut 600 jobs from its global corporate and investment banking (GCIB) division, following a drop in third quarter revenues.
The cuts, which represent between 7% and 8% of staff in the division, will take place during the next six months, a spokeswoman at the bank said.
"It is a global cutback and will take place internationally as well as in the US. It is wide-ranging in terms of job types and product areas. We are not taking a charge against earnings for the cuts," she said. Senior managers as well as junior bankers will lose their jobs.
The cuts will add to the growing gloom in the securities industry, which has seen nearly 30,000 redundancies this year. Most recently Bear Stearns announced cuts of 800 staff, and JP Morgan Chase laid off another several thousand staff. Credit Suisse First Boston this month launched a programme to cut 2,000 staff in a bid to save $1bn a year.
It is not yet known how the bank will make the cuts, and whether it will use a voluntary redundancy programme.
Bank of America announced the job cuts eight days after unveiling third quarter results showing profits in the division falling 8% year-on-year. While fixed income remained healthy, investment banking was hit hard, with profits down 19% on the same quarter last year. Cuts are expected to be most severe in the bank's merger and acquisition and equities businesses.
The redundancies come at a critical time for the bank in Europe, where it has been dramatically building up its investment banking operations in the past year. It has built a European equities operation almost from scratch after hiring staff from Deutsche Bank and the former Donaldson, Lufkin & Jenrette. It is unclear at this stage to what extent the European operations will be affected.