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Bank of America announces additional 4,500 job cuts

CHARLOTTE, N.C. -- Bank of America Corp. (NYSE: BAC) said Thursday it will cut another 4,500 jobs beginning this month as a result of its merger with FleetBoston Financial Corp. and declining business in mortgages.

The 2.5 percent reduction of the work force, disclosed Thursday, comes on top of 12,500 layoffs that the bank previously said it expected to see from the mega-merger with FleetBoston, which went through earlier this year.

Bank of America, which employs about 178,000 people, said the latest round of cuts will not affect employment commitments it made in New England after complaints by state officials in Massachusetts.

Bank of America's share price rose 18 cents to close at $45.43, above its recent 52-week high of $45.37.

A spokeswoman for the bank, Alex Trower, said the newly announced reductions will be largely be concentrated in support areas, such as finance, marketing and operations. The cuts will affect few workers who deal directly with customers, such as tellers, Trower said.

Before the merger was complete, the bank pledged to maintain employment levels in what it calls "customer-facing positions."

Trower said a reorganization of the bank, unanticipated cost savings identified during the merger and the fluctuations of the business cycle -- particularly the rise in interest rates that is reducing mortgage activity -- are all behind the additional layoffs.

The bank is reorganizing by combining consumer banking, consumer products and small business banking into one major banking line. In addition, the bank will move its premier banking division into the wealth and investment management organization.

Bank of America also recently created a new group, technology, service and fulfillment, to streamline the bank's service infrastructure.

Bank of America announced last month that wealth and investment management would move to Boston, concentrating one the company's four major business lines in Fleet's former headquarters city. That move was viewed as an effort to reassure Massachusetts officials that the company is committed to the Northeast.

U.S. Rep. Barney Frank, D-Mass., a leading critic of the merger, said Thursday that the latest layoffs are a troubling counterpoint to the decision to move the wealth and investment management unit to Boston.

"Bank of America officials continue to maintain that we will have suffered no net job losses by early in 2006, but that is little solace to the people who are losing jobs now," Frank said in a prepared statement. "Furthermore, while Bank of America tells us there will be 'ebbs and flows' before we reach that point in 2006, a pattern of continuous 'ebbing' leaves many of us skeptical."

The bank said Thursday it expects the new layoffs to cost about $150 million in severance costs between the third quarter of this year and the first quarter of 2005.

Workers who lose their jobs are to receive career support resources, job posting services, extended benefits and severance pay.


AP Business Writer Mark Jewell in Boston contributed to this report.

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