The job cuts, which the Wall Street Diary said could rise to 10, 000 in coming months, follows a series of quarterly losses in the last two years by the biggest US bank, including a record loss associated with $8. 8 billion in the latest quarter.
Moynihan announced the 3, 500 cuts inside a memo to staff on Thursday.
Investors have pummeled the banks' stock in recent weeks on fears it should raise outside capital to absorb losses.
Moynihan has remained adamant that the share offering is unnecessary, and the bank can raise enough capital via improved quarterly profits.
Yet with low interest rates and a sluggish ALL OF US economy providing few opportunities for revenue growth, analysts said the bank is forced to check out expense cuts.
"There's very few things they can control in this atmosphere, and this lever is one of them, " said Jefferson Harralson, that follows US bank stocks at Keefe, Bruyette & Woods Inc.
The job cuts are expected to be supplemented by additional cost-cutting in future quarters included in a previously announced expense control program known as New BAC -- a mention of the the bank's stock ticker.
"The third-quarter reductions in force are not the main New BAC Project, through which employees and managers are working to change policies, practices and organizations to better align to the company's customer-driven technique, " the memo obtained by Reuters said.
Bank of America is a part of a growing list of large banks trimming jobs.
Global banks have announced near to 50, 000 job cuts in recent months, with some expected to lengthen into 2012. Bank of New York Mellon Corp last week said this plans to cut about 1, 500 jobs, or 3% of its labor force.
So far this year, Bank of America shares are down 37%, by mid-morning Friday.
FUTURE CUTS
Bank executives haven't announced specific areas of cuts, but one person familiar with the situation said at least 10, 000 jobs could be eliminated as part of a wider review, according to a report within the Wall Street Journal.
Analysts said the bank is most likely to cut from its branches along with other retail banking businesses, which now generate little profit for the bank inside a weak economy.
More profitable areas of the bank -- like corporate as well as investment banking, or wealth management -- will see fewer cuts, analysts stated.
With little new loan growth and customers hoarding cash, US banks' demand for deposits has declined in the heights of the housing boom when new deposits were necessary to energy exploding loan growth.
Bank of America has gradually cut back its branch network from a lot more than 6, 000 branches to roughly 5, 800.
"The long-term future of the is not in bricks-and-mortar branches, " said Tony Plath, banking professor in the University of North Carolina at Charlotte. "That's the business that's now for the most part risk of getting cut. "
Bank of America had around 280, 000 employees in the beginning of 2011, according to its annual report, meaning the announced layoffs will affect just about 1% of the company's employees.
During a conference call with investors a week ago, Moynihan said the bank could cut as much as $1. 5 million in quarterly expenses. He referred specifically to shrinking its mortgage portfolio in addition to New BAC.
Bank of America accumulated total noninterest expenses of $43 billion within the first six months of 2011, up 23% from the comparable 2010 time period. Compensation accounted for 44% of the expenses this year.
Moynihan has repeatedly denied plans to issue more shares that might be dilutive to current shareholders, after the bank's share count rose from 4 billion prior to the 2008 financial crisis to roughly 10 billion now.
ASSET SALES
Moynihan has said how the company will continue to shed nonessential assets. On Monday it announced plans to market its $8. 6 billion Canadian credit card portfolio to TD Bank Group and said it's considering exiting its United Kingdom and Ireland card businesses.
It has not yet decided whether to market or wind down the UK and Irish operations, a company spokesman said at that time.
In an attempt to move forward on remedying its mortgage problems, the organization on Thursday appointed an executive from its Merrill Lynch investment banking unit to oversee its troubled mortgage loan portfolio. The consumer mortgage division of the bank has contributed to more than $22 billion of losses within the last four quarters.
The bank's second-quarter loss of $8. 8 billion, its most detrimental ever, included plans to pay $8. 5 billion to settle a suit from mortgage securities investors. However, other investors are contesting the settlement.
Bank stocks worldwide happen to be under pressure in recent days. Option traders on Thursday zeroed in on European bank stocks in addition to on Bank of America and Citigroup. More than 71, 000 November $4 places on BofA changed hands, giving holders the right to sell the stock at a bit more than half its current price.
Shares of the bank, which traded over $15 in January, were down 3 cents at $6. 98 in midday trading Friday about the New York Stock Exchange.