CHICAGO - The municipal groups at Bank of America Corp. and Merrill Lynch & Co. are bracing for a new round of layoffs in the coming weeks as the bank seeks to steeply trim its ranks as it merges the public finance groups of each amid ongoing losses and economic turmoil.
The new round is expected as soon as late next week, according to market sources, and would follow the most recent series of firings that took place last Thursday and Friday and included bankers, traders, sales, and underwriting professionals in offices throughout the country.
No figures on the latest cuts were available yesterday, although sources said the bank focused primarily on sales and trading layoffs on Thursday with investment banking cuts following on Friday. The ultimate goal of the reductions is to trim roughly 40% off the tax-exempt group's head count, according to public finance sources citing internal speculation.
Representatives of both firms, which are still in the process of merging operations, declined to comment, citing company policy against releasing specific information on staff cuts.
In New York, Kimberly Paparello-Vaccari - a former finance director at the Metropolitan Transportation Authority who was the team leader of Banc of America Securities LLC's transportation group - was fired, sources said.
In Chicago, the bank cut veteran general government banker Neil Pritz, a managing director, but sources said he will join the growing banking group at BMO Capital Markets GKST Inc. Chicago-based health care banker Phillip Kaplan, who had previously worked at Goldman, Sachs & Co., was also cut.
Michael Placencia, a banker at Merrill who joined last summer from UBS, was cut, as were derivatives specialists Damon Lee of Merrill, who worked out of London, and Banc of America's Max Anthony, who worked out of Charlotte.
"It's not about capabilities, it's about overlap and reducing bodies," one source said. "It's a very rough time."
Sources said extensive cuts were made to the Banc of America sales, trading, and underwriting teams in New York and Charlotte, with the exception of the short-term desk.
Bank of America in late January undertook its first wave of layoffs, with the most prominent member of the public finance group cut in that round being Peter Hill, who had managed the public finance investment banking group.
The move followed the December announcement that Merrill's chairman of municipal markets, John Lawlor, had been selected to lead the merged muni unit. Lawlor is overseeing all municipal activities, including origination, sales, and trading.
Prior to the merger, Merrill last fall fired more than a dozen public finance bankers and as many as 10 sales and trading professionals. The cuts came just a few months after it announced the hiring of 30 bankers from the shuttered public finance business of UBS Financial Services Inc., boosting it banking staff to about 150.
Bank of America early last year undertook its own round of cuts, closing its St. Louis office and cutting several bankers in Chicago, New York, and elsewhere.
Merrill ranked second last year among senior managers on all bond issues, managing $40.8 billion in 340 issues, while Banc of America ranked seventh, with 353 issues totaling $19.9 billion, according to Thomson Reuters.
Bank of America announced its agreement to purchase Merrill Lynch - known for its "thundering herd" of brokers - on Sept. 15, the same day Lehman Brothers Holdings Inc. filed for bankruptcy.
Originally worth about $50 billion, the deal's value has fallen sharply as Bank of America's stock price has slid.
Bank of America received $25 billion from the federal government's Troubled Asset Relief Program last September, and requested another $20 million at the end of the year as it was absorbing Merrill, which reported a $15 billion fourth-quarter loss.