Bank of America, stung by huge trading losses in the third quarter, is to cut 650 jobs in its investment bank and sell its small prime brokerage business that caters to hedge funds. BofA, the biggest US bank by market value, added it would reduce its securitised products book, including cutting production of CDOs. Such securities, often backed by mortgages, have caused big losses at BofA. The move comes after Ken Lewis, chief executive, said in October he had had “all the fun” he could stand in the investment banking business. Those remarks were in response to a 93% drop in Q3 earnings at the investment bank from $1.43bn to $100m. BofA has warned that Q4 results will be “quite disappointing” and will include a $3.3bn provision for loan losses and further asset writedowns. However the bank is still expected to say it made a profit when it reports next week.
