After announcing its fourth-quarter results last week, Bank of America is scheduled to announce its bonuses next week, and when it does, there may be disappointment. Bank of America could benefit from some people’s disappointment; They won’t leave.
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Speaking to investors on Friday, Bank of America CEO Brian Moynihan said he believed the bank’s turnover was just 6% in the fourth quarter of 2023, half its usual rate of 12% and below the 7% average for the full year. Employee turnover is “very low,” Moynihan noted.
The low turnover rate may be due to the joy of working for Bank of America, which has been investing in its markets business and says it is gaining stake in investment banking. However, it may also stem from a lack of alternative employment opportunities and an almost cowardly clinging to existing roles. Bank of America isn’t the only place with this problem: Morgan Stanley and KPMG have complained about this phenomenon as well.
Moynihan did not address why employees were more willing to continue working for Bank of America. He didn’t say it was a bad thing. However, it was low turnover that encouraged Bank of America to implement a quasi-hiring freeze this time last year, and since turnover is still low, the implication is that this will remain in place.
Instead of filling the vacancies with people recruited from outside, Moynihan said last week that Bank of America was “He added that artificial intelligence could enable more of this redistribution in 2024. Last year, bankers in mergers and acquisitions In the quiet markets who were Accustomed to working on larger deals, they were encouraged to work with mid-market clients instead.
Despite the hiring freeze and internal redeployment, Bank of America is still very busy hiring. In 2023, Moynihan said 15,000 people were employed across all areas of the business. However, this coincided with a staff reduction of around 5,000 people as the bank went from 218,000 employees on January 23 to 212,900 in December.
If 15,260 people left (7% of 281,000) and 15,000 people were hired, it would imply that Bank of America also cut 5,000 people last year. However, CFO Alistair Borthwick said the cuts had been achieved through “attrition” and that Bank of America had managed to avoid paying “huge severance fees”.
Could Bank of America benefit from further depletion in 2024? Maybe not now. Borthwick said the assumption is that last year’s markets revenues have become a new normal, and Moynihan said there is a “full pipeline” of investment banking deals that would soon return the bank to $1.5 billion in revenues even if there is a lack of clarity on when those will happen. Deals. will be done.
And if there is a need to reduce costs? Moynihan said they can continue to manage costs by eliminating hiring replacements for people who leave. In this case, it may be helpful for a few people to leave in the first place.
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