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Bank of America to close 10% of branches: WSJ
Troubled firm reverses expansion course
By Sam Mamudi, MarketWatch
Last Update: 8:30 AM ET Jul 28, 2009
NEW YORK (MarketWatch) -- Bank of America Corp. plans to close roughly 10% of its 6,100 branches, according to a report in Tuesday's Wall Street Journal.
Chief Executive Ken Lewis revealed the plan to investors at a meeting in Charlotte, N.C., last week, said the paper. The Journal said Liam McGee, president of Bank of America's BAC consumer and small-business bank, also said there would be closures but that it would be premature to provide details.
The main reason for shrinking the branch network was changing consumer preferences, said McGee, as use of online and mobile banking is increasing.
The Journal added that neither Lewis nor McGee would say when the closings will happen, and a firm spokesman refused to talk about the issue.
The Bank of America branch network covers about 82% of the U.S. population and is located in 32 states, said the Journal, adding that in the 1990s expansion of the network was seen as crucial to the firm's overall strategy.
Wells Fargo & Co. WFC, has 6,668 branches in 39 states after its acquisition of Wachovia Corp., and has no plans to close any branches according to a spokesperson, said the Journal. The paper added that J.P. Morgan Chase & Co. JPM has about 5,100 U.S. branches and has closed about 390 former Washington Mutual branches since buying that bank in September. The Journal quoted a J.P. Morgan spokesman, who said it typically builds 100-125 new bank branches a year, a strategy that will continue "for the foreseeable future."
Earlier this month, Bank of America reported that its second-quarter profit slipped slightly, to $3.2 billion, or 33 cents a share, compared with $3.4 billion or 72 cents a share, in the year-ago period. At the time of the results, Lewis warned of tougher times ahead, saying global economic weakness, rising unemployment and deteriorating credit quality will hit profits for the rest of the year and into 2101. See full story.
Analysts have suggested that Bank of America will soon issue bonds, after Citigroup Inc. C successfully sold $2.5 billion in debt on July 20.
Shares of Bank of America were up nearly 5% on Monday, and are up almost 3% in the past month. The firm, however, has seen its stock price fall 53% in the past year.
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