Bank of America wants to cut costs by $5 billion a year

Bank of America CEO Brian Moynihan said Monday that the bank wants to reduce annual expenses by $5 billion by 2013.

The cost cutting initiative will be known as New BAC (BAC is the company's stock symbol), and will focus at first on consumer banking and the bank's systems architecture, according to Reuters. A second phase of the initiative will focus on institutional client businesses like corporate banking.

Bloomberg reports that the plan will result in the elimination of 30,000 jobs over the next few years.

“We don’t have to be the biggest company out there, we have to be the best,” Moynihan said. “We can get out of things we don’t need to do, make the company leaner, more straightforward, more driven.”

From Reuters:

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

Bank of America has about 50 senior employees reviewing some 150,000 ideas for cutting costs, Moynihan said. He disclosed details of the New BAC program at a Barclays Capital financial services conference.

According to Reuters, many estimates show that Bank of America needs to raise $50 billion in the next few years to meet new global capital requirements.

Bloomberg reports that the Bank of America's profit is suffering "mainly because of losses, legal costs and writedowns tied to the 2008 takeover of subprime lender Countrywide Financial Corp. At the same time, revenue is shrinking as the U.S. economy slows."

Media reports on Friday said that Bank of America was considering cutting as many as 40,000 jobs. Earlier this year, the bank announced 6,000 job cuts, and decided to sell half its stake in China Construction Bank. In late August, it was announced that Warren Buffett had agreed to invest $5 billion in the bank.

Bank of America, the nation's largest bank employer, employed 288,000 workers as of June 30, Bloomberg reports. The bank's shares have lost nearly half their value since January.