Bank of America Corp. expects its multi-year effort of shifting overseas jobs to the U.S. will be complete some time in 2016, the chief executive officer of the Charlotte, North Carolina-based company said Friday.
Under Brian Moynihan, the bank has been relocating jobs it inherited when it bought other companies. The move has helped BofA offset layoffs made in some parts of the bank under Moynihan, who has eliminated tens of thousands of positions since becoming CEO in 2010.
“It’s completing as we speak,” Moynihan said in a wide-ranging, half-hour interview with the Observer.
Jobs shifting to the U.S. are largely consumer-facing, Moynihan said.
“We pulled that back in on the theory that we want that done here [in the United States],” he said. “They’ve gone all over the company and offset some of the other [U.S. job] reductions going on.”
Moynihan, who at 56 is entering his seventh year as CEO, also discussed his outlook for the company’s overall employment number and a variety of other issues. His comments have been edited for brevity and clarity.
Q: What’s the bank’s biggest opportunity and biggest challenge in 2016?
A: On the opportunity side, it’s to grow and grow responsibly. Our mantra is we’ve got to grow, no excuses. We’ve got to grow consistent with our core strategies: organic growth only. We’ve got to grow consistent with the risk parameters that we have for our company. And then we’ve got to keep investing in the future.
The biggest downside always is the economy. We have broad exposure in the U.S. — and exposure around the world also — to economic activity driven by the economy. That’s the No. 1 challenge.
Q: The Federal Reserve decided to raise short-term interest rates by a quarter percentage point this week. What do higher interest rates mean for Bank of America’s bottom line?
A: We get over $4 billion of [annual] income (if long- and short-term rates were both to rise by 1 percentage point). What drives our franchise, the whole business model is built off of giving customers great transactional capabilities and then lending them money. And the transactional capabilities have huge amounts ($500 billion) in deposits, which are non-interest-bearing in any interest rate environment.
(Another $500 billion in interest-bearing deposits) will price based on market conditions and competition and all that. (A quarter percentage point increase) doesn’t change half our deposits, and the other half (are priced) based on what goes on in the market.
Q: What new banking technology excites you the most?
A: It’s (the) convenience (smart phones, tablets and other devices create) for the customer. That’s what’s exciting. It’s to get people to use and understand the value of it that’s the key.
We have 18.6 million mobile-banking customers — we get about 5,000 or 6,000 more a day. Three years ago, we just started (allowing) the ability to take a picture of the check (with a phone, to deposit it remotely). Now, 14, 15 percent of all the checks are deposited that way. What gets me excited is the customers are seeing the value (in technology) as fast, or faster, than we thought they would. And that then gives you courage to push more and more towards it.
Q: The bank recently cut 100 jobs in mortgage and technology areas in Charlotte. Should we expect more cuts in Charlotte?
A: We don’t get into the future plans. I think that the broader way to think about this is over the last five or six years we reduced the company’s size by a third. And Charlotte’s (employment of about 15,000 has) been relatively flat. As our corporate headquarters, it will always fare better because of the nature of the things that are here and the nature of the fact that it’s the corporate headquarters.
Q: How much lower do you expect the bank’s overall global employment, which was 215,193 at the end of September, to go?
A: You wouldn’t expect the changes to be as dramatic in the future. We continue to invest $3 billion a year in technology development. We continue to add sales people throughout the platform. We continue to invest in real estate, and building out, and shifting our real estate usage, and consolidating and building big data centers that consolidate 60 data centers down to 14.
So, there’s always this turnover. The headcount may be relatively the same, but who’s in the headcount changes over time as we continue to eliminate work by applying technology, by customer behavior change, by all that. I think banking industry employment will be relatively static, and our employment will be relatively static.
Q: Protesters last month at Bank of America Stadium targeted the bank’s relationship with Dominion Resources, which is building a liquefied natural gas facility in Maryland. What was your reaction to the protesters and their claims that the facility will threaten lives of people who live near it?
A: I have two reactions to it. One is you have a 13-0 football team. We have a great football team. The other reaction: We have a great environmental program. We just had our teammates in Paris (for international climate talks earlier this month).
We have a $125 billion environmental program. We continue to fund the transition from certain resources to other resources — i.e., heavy fossil fuel-laden to non, which our customers are doing. This is a customer-driven exercise.
The merits of any specific debate about a specific client, I wouldn’t get into.
Q: The bank has stumbled on some of its previous “stress tests,” which the Federal Reserve uses to determine whether banks have enough capital to withstand another economic downturn. What is the bank doing to make sure it has no issues with next year’s test?
A: We’re working hard on all the input we get from the regulators, and we’re spending a lot of time, and effort, and money and people to make sure that we get it right.
Q: Wells Fargo CEO John Stumpf has picked his president and potential successor. At 62, he’s older than you, but do you have any plans to make that kind of appointment?
A: (Laughs) You’re trying to run me out of here? Is that it?
We have robust succession planning. It’s one of the core duties I have, and one of the core duties the board has, is to be looking always at who might succeed me. But I’ve got a lot of life in me. It’s a great job and a great company. There’s a lot of hard work ahead. But it’s fun to do.
Q: The bank’s shares closed at $17.30 Thursday, which is about where they were this time last year. What factors, in your opinion, are keeping the price from being higher?
A: We just have to keep driving the company’s earnings forward. (Over the past four quarters the bank has earned) $16 billion after taxes — second highest earnings in the company’s history. I think we’re the fourth most-valuable financial services company in the world now. And we’ve still got work to do. We’ll continue to push it. We’re not satisfied with the share price. It always should be higher. Our job is to drive more earnings to make it higher.
Q: Were you watching the GOP presidential debate in November when Sen. Ted Cruz of Texas said he would not bail out Bank of America if it were on the verge of failure?
A: The answer’s no. (Since the 2010 Dodd-Frank financial overhaul law) you’ve ended up with an industry that’s extremely strong. That’s what eliminates “too big to fail,” is the fact that you’ve built such (higher) capital bases, liquidity bases, rules around what can be done (by banks) and what can’t be done.
We have $40-plus billion of capital which we’re allowed to take no risk on at our company today. It’s 30 percent of our capital, round numbers, we can’t take any risk on. That is there to be a buffer. It’s all things in moderation now, the way the industry’s working. That’s what eliminates too big to fail.
Q: Have you been to any Panthers games this season?
A: I don’t go to football games, generally. I’ve watched them on TV. The (New York) Giants have caused trouble to a lot of people, so hopefully you’ll get through that easily this weekend.
