Profitability problems at Bank of America Corp. (NYSE: BAC) will lead to a pay cut of 25% for the company’s investment banking group. Bloomberg News reports that bank executives had previously said that this would happen, but this is the week when pay discussions actually occur. Investment bankers face cuts to both salary and bonus payments.
BofA’s investment banking division posted a loss of $443 million in the fourth quarter and a $302 million loss in the third quarter.
The bank has committed to cutting $5 billion in costs this year and is looking to add another $3 billion in cost savings. Revenues are lower following new regulations related to proprietary trading desks, as well as tighter reserve regulations.