October 20, 2008, 11:33 AM — Bank of America's takeover of Merrill Lynch will result in thousands of job losses, Merrill Lynch chief executive John Thain has said.
Most of the job cuts will come from IT as well as operations and finance across both banks, Thain said in an interview with Bloomberg.
"We haven't mapped it out in terms of actual number of people, but we are committed to saving $7 billion (£4 billion) across the combined platforms, and that will be a challenge," Thain said. "Between our two companies, it will be clearly thousands of jobs."
Bank of America is buying Merrill Lynch in a $50 billion (£29 billion) deal. The deal is expected to close in the first quarter, pending shareholder approval.
Merrill Lynch has one of the largest IT budgets of all investment banks, spending $546 million (£318 million) in the last quarter on ongoing technology investments and system development initiatives, including continued investment in its Global Wealth Management platforms and workstations. The bank has spent nearly more than $1.6 billion (£932 million) on technology for the nine month period ending 29 September.
The firm has already cut more than 5,000 jobs in the past 18 months, Bloomberg reported, taking its headcount to about 60,000. In its quarterly statement released 16 October, Merrill Lynch said it has spent $39 million on restructuring charges, mainly related to severance costs for technology workers. This brought the restructuring charge for the nine month period to $484 million.
