Bank of America will reduce annual expenses by $5 billion by 2013 through its cost-cutting initiative, according to CEO Brian Moynihan.  The program is known as New BAC - after the company's stock symbol.  The bank has about 50 senior employees reviewing some 150,000 ideas for cutting costs, Moynihan said. 

As he disclosed details of the New BAC program at a Barclays Capital financial services conference, Moynihan touched on four main points:

• The first phase of New BAC focuses on consumer banking and the bank's systems architecture.
• The second phase will focus on institutional client businesses such as corporate banking.
• Much of the plan is geared towards consolidating assets. According to analysts, BofA has not properly integrated systems or closed unnecessary branches resulting from decades of acquisitions.
• The bank will also cut 30,000 jobs over the next three years.

The bank is targeting an expense-to-revenue ratio to 55% and is cutting from roughly $73 billion in annual expenses.

Bank of America shares have lost nearly half their value this year amid rising fears the bank will need to sell more shares to boost its capital levels. By many estimates, the bank will need to raise about $50 billion in coming years to meet new global capital requirements, a level the bank says it can reach through earnings and asset sales.

Investors fear mortgage settlements could boost the bank's capital requirements, and that any stock offering would further dilute shareholder equity.  The bank's share count has risen from 4 billion in 2007, before the financial crisis peaked, to more than 10 billion this year.  [Reuters, 9/12/11]