BOFA TO AX 650, SHUT UNIT

By ZACHERY KOUWE

January 16, 2008 -- Bank of America chief Ken Lewis, fresh off a deal to buy struggling mortgage giant Countrywide Financial, plans to slash 650 jobs and sell its prime brokerage unit after suffering big losses on soured mortgage bets.

The job cuts represent about 12 percent of the investment-banking department's total 5,900 employees. The layoffs are in addition to previous plans to ax 3,000 people, including 500 in the corporate and investment bank. The entire company employs about 220,000 people.

BofA, which suffered $2 billion worth of writedowns and trading losses last year, is cutting back on its structured products business, which packages and sells real-estate loans and other mortgage-related debt, Lewis said.

Wall Street has always regarded BofA as a second-tier player in the investment-banking world despite its success in leveraged finance and other areas of lending. Three years ago, BofA pledged to become one of the top three investment banks in the areas of merger advice and underwriting.

But in October Lewis said the firm would be scaling back operations amid sharp earnings declines and subprime chaos.